Correlation Between Kinetics Paradigm and Causeway International

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

Diversification Opportunities for Kinetics Paradigm and Causeway International

0.32

Correlation Coefficient

Kinetics Paradigm  Causeway International

Weak diversification

The 3 months correlation between Kinetics and Causeway is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway 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 Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Causeway International go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Causeway International

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 2.57 times more return on investment than Causeway International. However, Kinetics Paradigm is 2.57 times more volatile than Causeway International Value. It trades about 0.08 of its potential returns per unit of risk. Causeway International Value is currently generating about 0.19 per unit of risk. If you would invest  11,308  in Kinetics Paradigm Fund on December 30, 2024 and sell it today you would earn a total of  1,222  from holding Kinetics Paradigm Fund or generate 10.81% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Causeway International Value

Kinetics Paradigm

Risk-Adjusted Performance

Modest

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

Causeway International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Causeway International Value are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Causeway International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Kinetics Paradigm and Causeway International

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

The idea behind Kinetics Paradigm Fund and Causeway International Value 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.