Correlation Between Kinetics Market and Touchstone Focused

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

Diversification Opportunities for Kinetics Market and Touchstone Focused

0.54

Correlation Coefficient

Kinetics Market  Touchstone Focused

Very weak diversification

The 3 months correlation between Kinetics and Touchstone is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Touchstone Focused Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Focused 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 Touchstone Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Focused has no effect on the direction of Kinetics Market i.e., Kinetics Market and Touchstone Focused go up and down completely randomly.

Pair Corralation between Kinetics Market and Touchstone Focused

Assuming the 90 days horizon Kinetics Market Opportunities is expected to under-perform the Touchstone Focused. In addition to that, Kinetics Market is 2.9 times more volatile than Touchstone Focused Fund. It trades about -0.11 of its total potential returns per unit of risk. Touchstone Focused Fund is currently generating about 0.01 per unit of volatility. If you would invest  7,655  in Touchstone Focused Fund on November 28, 2024 and sell it today you would earn a total of  14.00  from holding Touchstone Focused Fund or generate 0.18% return on investment over 90 days.

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

Kinetics Market Opportunities  vs.  Touchstone Focused Fund

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 weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Touchstone Focused

Risk-Adjusted Performance

Very Weak

Over the last 90 days Touchstone Focused Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Touchstone Focused 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 Touchstone Focused

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

The idea behind Kinetics Market Opportunities and Touchstone Focused 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.