Correlation Between Kinetics Global and Invesco Short

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

Diversification Opportunities for Kinetics Global and Invesco Short

-0.37

Correlation Coefficient

Kinetics Global  Invesco Short

Very good diversification

The 3 months correlation between Kinetics and Invesco is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Invesco Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Short Term 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 Invesco Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Short Term has no effect on the direction of Kinetics Global i.e., Kinetics Global and Invesco Short go up and down completely randomly.

Pair Corralation between Kinetics Global and Invesco Short

Assuming the 90 days horizon Kinetics Global Fund is expected to generate 13.17 times more return on investment than Invesco Short. However, Kinetics Global is 13.17 times more volatile than Invesco Short Term. It trades about 0.27 of its potential returns per unit of risk. Invesco Short Term is currently generating about -0.02 per unit of risk. If you would invest  1,195  in Kinetics Global Fund on September 17, 2024 and sell it today you would earn a total of  344.00  from holding Kinetics Global Fund or generate 28.79% return on investment over 90 days.

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

Kinetics Global Fund  vs.  Invesco Short Term

Kinetics Global

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 21 (%) 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.

Invesco Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Short Term has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Invesco Short 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 Invesco Short

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

The idea behind Kinetics Global Fund and Invesco Short Term 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.