Correlation Between Kinetics Market and Pimco High

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

Diversification Opportunities for Kinetics Market and Pimco High

0.51

Correlation Coefficient

Kinetics Market  Pimco High

Very weak diversification

The 3 months correlation between Kinetics and Pimco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Pimco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco High Income 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 Pimco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco High Income has no effect on the direction of Kinetics Market i.e., Kinetics Market and Pimco High go up and down completely randomly.

Pair Corralation between Kinetics Market and Pimco High

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 5.16 times more return on investment than Pimco High. However, Kinetics Market is 5.16 times more volatile than Pimco High Income. It trades about 0.08 of its potential returns per unit of risk. Pimco High Income is currently generating about 0.13 per unit of risk. If you would invest  7,668  in Kinetics Market Opportunities on December 29, 2024 and sell it today you would earn a total of  706.00  from holding Kinetics Market Opportunities or generate 9.21% 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.  Pimco High Income

Kinetics Market Oppo

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Market may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pimco High Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco High Income are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent technical indicators, Pimco High is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kinetics Market and Pimco High

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

The idea behind Kinetics Market Opportunities and Pimco High Income 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.