Correlation Between Kinetics Paradigm and Sextant International

Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Sextant International 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 Paradigm and Sextant International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Paradigm Fund and Sextant International Fund, you can compare the effects of market volatilities on Kinetics Paradigm and Sextant International 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 Paradigm with a short position of Sextant International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Sextant International.

Diversification Opportunities for Kinetics Paradigm and Sextant International

-0.71

Correlation Coefficient

Kinetics Paradigm  Sextant International

Pay attention - limited upside

The 3 months correlation between Kinetics and Sextant is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Sextant International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sextant International and Kinetics Paradigm 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 Paradigm Fund are associated (or correlated) with Sextant International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sextant International has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Sextant International go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Sextant International

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 3.35 times more return on investment than Sextant International. However, Kinetics Paradigm is 3.35 times more volatile than Sextant International Fund. It trades about 0.2 of its potential returns per unit of risk. Sextant International Fund is currently generating about -0.03 per unit of risk. If you would invest  10,126  in Kinetics Paradigm Fund on September 14, 2024 and sell it today you would earn a total of  4,009  from holding Kinetics Paradigm Fund or generate 39.59% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Sextant International Fund

Kinetics Paradigm

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Paradigm showed solid returns over the last few months and may actually be approaching a breakup point.

Sextant International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sextant International Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Sextant International 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 Paradigm and Sextant International

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

The idea behind Kinetics Paradigm Fund and Sextant International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.