Correlation Between Kinetics Global and Morningstar International

Can any of the company-specific risk be diversified away by investing in both Kinetics Global and Morningstar International 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 Morningstar International 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 Morningstar International Equity, you can compare the effects of market volatilities on Kinetics Global and Morningstar International 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 Morningstar International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Global and Morningstar International.

Diversification Opportunities for Kinetics Global and Morningstar International

-0.66

Correlation Coefficient

Kinetics Global  Morningstar International

Excellent diversification

The 3 months correlation between Kinetics and Morningstar is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Morningstar International Equi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morningstar International 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 Morningstar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morningstar International has no effect on the direction of Kinetics Global i.e., Kinetics Global and Morningstar International go up and down completely randomly.

Pair Corralation between Kinetics Global and Morningstar International

Assuming the 90 days horizon Kinetics Global Fund is expected to generate 1.99 times more return on investment than Morningstar International. However, Kinetics Global is 1.99 times more volatile than Morningstar International Equity. It trades about 0.21 of its potential returns per unit of risk. Morningstar International Equity is currently generating about -0.22 per unit of risk. If you would invest  1,244  in Kinetics Global Fund on October 10, 2024 and sell it today you would earn a total of  279.00  from holding Kinetics Global Fund or generate 22.43% return on investment over 90 days.

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

Kinetics Global Fund  vs.  Morningstar International Equi

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.

Morningstar International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morningstar International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Kinetics Global and Morningstar International

The main advantage of trading using opposite Kinetics Global and Morningstar International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Global position performs unexpectedly, Morningstar International 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 Morningstar International will offset losses from the drop in Morningstar International's long position.

The idea behind Kinetics Global Fund and Morningstar International Equity 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.