Correlation Between Kinetics Market and L Abbett

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

Diversification Opportunities for Kinetics Market and L Abbett

0.24

Correlation Coefficient

Kinetics Market  L Abbett

Modest diversification

The 3 months correlation between Kinetics and LGLSX is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and L Abbett Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Growth 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 L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Growth has no effect on the direction of Kinetics Market i.e., Kinetics Market and L Abbett go up and down completely randomly.

Pair Corralation between Kinetics Market and L Abbett

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 1.03 times more return on investment than L Abbett. However, Kinetics Market is 1.03 times more volatile than L Abbett Growth. It trades about -0.01 of its potential returns per unit of risk. L Abbett Growth is currently generating about -0.1 per unit of risk. If you would invest  7,983  in Kinetics Market Opportunities on December 7, 2024 and sell it today you would lose (171.00) from holding Kinetics Market Opportunities or give up 2.14% of portfolio value over 90 days.

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

Kinetics Market Opportunities  vs.  L Abbett Growth

Kinetics Market Oppo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Market Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Kinetics Market is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

L Abbett Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days L Abbett Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Kinetics Market and L Abbett

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

The idea behind Kinetics Market Opportunities and L Abbett Growth 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.

Check out your portfolio center.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.