Correlation Between Kinetics Global and Ultrashort Small-cap

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

Diversification Opportunities for Kinetics Global and Ultrashort Small-cap

-0.57

Correlation Coefficient

Kinetics Global  Ultrashort Small-cap

Excellent diversification

The 3 months correlation between Kinetics and Ultrashort is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Ultrashort Small Cap Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultrashort Small Cap 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 Ultrashort Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultrashort Small Cap has no effect on the direction of Kinetics Global i.e., Kinetics Global and Ultrashort Small-cap go up and down completely randomly.

Pair Corralation between Kinetics Global and Ultrashort Small-cap

Assuming the 90 days horizon Kinetics Global is expected to generate 6.54 times less return on investment than Ultrashort Small-cap. But when comparing it to its historical volatility, Kinetics Global Fund is 1.88 times less risky than Ultrashort Small-cap. It trades about 0.03 of its potential returns per unit of risk. Ultrashort Small Cap Profund is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,149  in Ultrashort Small Cap Profund on December 23, 2024 and sell it today you would earn a total of  675.00  from holding Ultrashort Small Cap Profund or generate 16.27% return on investment over 90 days.

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

Kinetics Global Fund  vs.  Ultrashort Small Cap Profund

Kinetics Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Kinetics Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ultrashort Small Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrashort Small Cap Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ultrashort Small-cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetics Global and Ultrashort Small-cap

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

The idea behind Kinetics Global Fund and Ultrashort Small Cap Profund 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.