Correlation Between Kinetics Global and Schwab Value

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

Diversification Opportunities for Kinetics Global and Schwab Value

0.89

Correlation Coefficient

Kinetics Global  Schwab Value

Very poor diversification

The 3 months correlation between Kinetics and Schwab is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Schwab Value Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Value Advantage 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 Schwab Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Value Advantage has no effect on the direction of Kinetics Global i.e., Kinetics Global and Schwab Value go up and down completely randomly.

Pair Corralation between Kinetics Global and Schwab Value

If you would invest  100.00  in Schwab Value Advantage on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Schwab Value Advantage or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Kinetics Global Fund  vs.  Schwab Value Advantage

Kinetics Global

Risk-Adjusted Performance

16 of 100

Good

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.

Schwab Value Advantage

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Value Advantage are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Schwab Value 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 Schwab Value

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

The idea behind Kinetics Global Fund and Schwab Value Advantage 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.