Correlation Between Kinetics Global and Aqr Global

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

Diversification Opportunities for Kinetics Global and Aqr Global

0.24

Correlation Coefficient

Kinetics Global  Aqr Global

Modest diversification

The 3 months correlation between Kinetics and Aqr is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Aqr Global Macro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Global Macro 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 Aqr Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Global Macro has no effect on the direction of Kinetics Global i.e., Kinetics Global and Aqr Global go up and down completely randomly.

Pair Corralation between Kinetics Global and Aqr Global

Assuming the 90 days horizon Kinetics Global Fund is expected to under-perform the Aqr Global. In addition to that, Kinetics Global is 2.3 times more volatile than Aqr Global Macro. It trades about -0.06 of its total potential returns per unit of risk. Aqr Global Macro is currently generating about 0.0 per unit of volatility. If you would invest  948.00  in Aqr Global Macro on October 9, 2024 and sell it today you would earn a total of  0.00  from holding Aqr Global Macro or generate 0.0% return on investment over 90 days.

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

Kinetics Global Fund  vs.  Aqr Global Macro

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.

Aqr Global Macro

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Macro are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Global 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 Aqr Global

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

The idea behind Kinetics Global Fund and Aqr Global Macro 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.