Correlation Between Kinetics Market and Northern Ustreasury

Can any of the company-specific risk be diversified away by investing in both Kinetics Market and Northern Ustreasury 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 Market and Northern Ustreasury into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Market Opportunities and Northern Ustreasury Index, you can compare the effects of market volatilities on Kinetics Market and Northern Ustreasury 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 Market with a short position of Northern Ustreasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and Northern Ustreasury.

Diversification Opportunities for Kinetics Market and Northern Ustreasury

-0.08

Correlation Coefficient

Kinetics Market  Northern Ustreasury

Good diversification

The 3 months correlation between Kinetics and NORTHERN is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Northern Ustreasury Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Ustreasury Index and Kinetics Market 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 Market Opportunities are associated (or correlated) with Northern Ustreasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Ustreasury Index has no effect on the direction of Kinetics Market i.e., Kinetics Market and Northern Ustreasury go up and down completely randomly.

Pair Corralation between Kinetics Market and Northern Ustreasury

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 7.03 times more return on investment than Northern Ustreasury. However, Kinetics Market is 7.03 times more volatile than Northern Ustreasury Index. It trades about 0.1 of its potential returns per unit of risk. Northern Ustreasury Index is currently generating about 0.1 per unit of risk. If you would invest  7,141  in Kinetics Market Opportunities on December 28, 2024 and sell it today you would earn a total of  775.00  from holding Kinetics Market Opportunities or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Kinetics Market Opportunities  vs.  Northern Ustreasury Index

Kinetics Market Oppo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Northern Ustreasury Index

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Ustreasury Index are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Northern Ustreasury 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 Market and Northern Ustreasury

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

The idea behind Kinetics Market Opportunities and Northern Ustreasury Index 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.