Correlation Between Kinetics Global and First Eagle

Can any of the company-specific risk be diversified away by investing in both Kinetics Global and First Eagle at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kinetics Global and First Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Global Fund and First Eagle Smid, you can compare the effects of market volatilities on Kinetics Global and First Eagle and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kinetics Global with a short position of First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Global and First Eagle.

Diversification Opportunities for Kinetics Global and First Eagle

0.51

Correlation Coefficient

Kinetics Global  First Eagle

Very weak diversification

The 3 months correlation between Kinetics and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and First Eagle Smid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Smid and Kinetics Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kinetics Global Fund are associated (or correlated) with First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Smid has no effect on the direction of Kinetics Global i.e., Kinetics Global and First Eagle go up and down completely randomly.

Pair Corralation between Kinetics Global and First Eagle

Assuming the 90 days horizon Kinetics Global Fund is expected to generate 1.53 times more return on investment than First Eagle. However, Kinetics Global is 1.53 times more volatile than First Eagle Smid. It trades about 0.41 of its potential returns per unit of risk. First Eagle Smid is currently generating about 0.28 per unit of risk. If you would invest  1,469  in Kinetics Global Fund on October 23, 2024 and sell it today you would earn a total of  127.00  from holding Kinetics Global Fund or generate 8.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Kinetics Global Fund  vs.  First Eagle Smid

Kinetics Global

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Global showed solid returns over the last few months and may actually be approaching a breakup point.

First Eagle Smid

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in First Eagle Smid are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, First Eagle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinetics Global and First Eagle

The main advantage of trading using opposite Kinetics Global and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Global position performs unexpectedly, First Eagle can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Eagle will offset losses from the drop in First Eagle's long position.

The idea behind Kinetics Global Fund and First Eagle Smid pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.