Correlation Between Kinetics Market and American Funds

Can any of the company-specific risk be diversified away by investing in both Kinetics Market and American Funds 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 American Funds 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 American Funds 2040, you can compare the effects of market volatilities on Kinetics Market and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Market and American Funds.

Diversification Opportunities for Kinetics Market and American Funds

0.33

Correlation Coefficient

Kinetics Market  American Funds

Weak diversification

The 3 months correlation between Kinetics and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Kinetics Market i.e., Kinetics Market and American Funds go up and down completely randomly.

Pair Corralation between Kinetics Market and American Funds

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 3.61 times more return on investment than American Funds. However, Kinetics Market is 3.61 times more volatile than American Funds 2040. It trades about 0.17 of its potential returns per unit of risk. American Funds 2040 is currently generating about 0.01 per unit of risk. If you would invest  6,620  in Kinetics Market Opportunities on October 24, 2024 and sell it today you would earn a total of  1,792  from holding Kinetics Market Opportunities or generate 27.07% return on investment over 90 days.

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

Kinetics Market Opportunities  vs.  American Funds 2040

Kinetics Market Oppo

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market showed solid returns over the last few months and may actually be approaching a breakup point.

American Funds 2040

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds 2040 are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Funds 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 American Funds

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

The idea behind Kinetics Market Opportunities and American Funds 2040 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.