Correlation Between Kinetics Market and Vanguard Emerging

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

Diversification Opportunities for Kinetics Market and Vanguard Emerging

0.39

Correlation Coefficient

Kinetics Market  Vanguard Emerging

Weak diversification

The 3 months correlation between Kinetics and Vanguard is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Vanguard Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Emerging Markets 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 Vanguard Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Emerging Markets has no effect on the direction of Kinetics Market i.e., Kinetics Market and Vanguard Emerging go up and down completely randomly.

Pair Corralation between Kinetics Market and Vanguard Emerging

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 9.2 times more return on investment than Vanguard Emerging. However, Kinetics Market is 9.2 times more volatile than Vanguard Emerging Markets. It trades about 0.16 of its potential returns per unit of risk. Vanguard Emerging Markets is currently generating about -0.03 per unit of risk. If you would invest  6,117  in Kinetics Market Opportunities on October 10, 2024 and sell it today you would earn a total of  1,586  from holding Kinetics Market Opportunities or generate 25.93% 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.  Vanguard Emerging Markets

Kinetics Market Oppo

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 12 (%) 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.

Vanguard Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Vanguard Emerging 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 Vanguard Emerging

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

The idea behind Kinetics Market Opportunities and Vanguard Emerging Markets 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.