Correlation Between Kinetics Market and Mfs Technology

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

Diversification Opportunities for Kinetics Market and Mfs Technology

0.01

Correlation Coefficient

Kinetics Market  Mfs Technology

Significant diversification

The 3 months correlation between Kinetics and Mfs is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Mfs Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Technology 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 Mfs Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Technology has no effect on the direction of Kinetics Market i.e., Kinetics Market and Mfs Technology go up and down completely randomly.

Pair Corralation between Kinetics Market and Mfs Technology

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 1.25 times more return on investment than Mfs Technology. However, Kinetics Market is 1.25 times more volatile than Mfs Technology Fund. It trades about 0.1 of its potential returns per unit of risk. Mfs Technology Fund is currently generating about -0.12 per unit of risk. If you would invest  7,214  in Kinetics Market Opportunities on December 21, 2024 and sell it today you would earn a total of  757.00  from holding Kinetics Market Opportunities or generate 10.49% return on investment over 90 days.

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

Kinetics Market Opportunities  vs.  Mfs Technology Fund

Kinetics Market Oppo

Risk-Adjusted Performance

OK

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.

Mfs Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Technology Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Mfs Technology

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

The idea behind Kinetics Market Opportunities and Mfs Technology Fund 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 Transaction History module to view history of all your transactions and understand their impact on performance.