Correlation Between Kinetics Market and Great West

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

Diversification Opportunities for Kinetics Market and Great West

0.61

Correlation Coefficient

Kinetics Market  Great West

Poor diversification

The 3 months correlation between Kinetics and Great is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of Kinetics Market i.e., Kinetics Market and Great West go up and down completely randomly.

Pair Corralation between Kinetics Market and Great West

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 1.46 times more return on investment than Great West. However, Kinetics Market is 1.46 times more volatile than Great West Goldman Sachs. It trades about 0.08 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.02 per unit of risk. If you would invest  4,063  in Kinetics Market Opportunities on October 5, 2024 and sell it today you would earn a total of  3,053  from holding Kinetics Market Opportunities or generate 75.14% return on investment over 90 days.

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

Kinetics Market Opportunities  vs.  Great West Goldman Sachs

Kinetics Market Oppo

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 8 (%) 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.

Great West Goldman

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Kinetics Market Opportunities and Great West Goldman Sachs 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.