Correlation Between Kinetics Global and Davis New

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

Diversification Opportunities for Kinetics Global and Davis New

0.01

Correlation Coefficient

Kinetics Global  Davis New

Significant diversification

The 3 months correlation between Kinetics and Davis is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Davis New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis New York 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 Davis New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis New York has no effect on the direction of Kinetics Global i.e., Kinetics Global and Davis New go up and down completely randomly.

Pair Corralation between Kinetics Global and Davis New

Assuming the 90 days horizon Kinetics Global Fund is expected to generate 1.06 times more return on investment than Davis New. However, Kinetics Global is 1.06 times more volatile than Davis New York. It trades about 0.11 of its potential returns per unit of risk. Davis New York is currently generating about 0.01 per unit of risk. If you would invest  779.00  in Kinetics Global Fund on October 11, 2024 and sell it today you would earn a total of  737.00  from holding Kinetics Global Fund or generate 94.61% return on investment over 90 days.

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

Kinetics Global Fund  vs.  Davis New York

Kinetics Global

Risk-Adjusted Performance

13 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 13 (%) 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.

Davis New York

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davis New York has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Kinetics Global and Davis New

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

The idea behind Kinetics Global Fund and Davis New York 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.