Correlation Between Kinetics Paradigm and Leader Total

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

Diversification Opportunities for Kinetics Paradigm and Leader Total

0.67

Correlation Coefficient

Kinetics Paradigm  Leader Total

Poor diversification

The 3 months correlation between Kinetics and Leader is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Leader Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Total Return 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 Leader Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Total Return has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Leader Total go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Leader Total

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Leader Total. In addition to that, Kinetics Paradigm is 145.58 times more volatile than Leader Total Return. It trades about -0.12 of its total potential returns per unit of risk. Leader Total Return is currently generating about -0.23 per unit of volatility. If you would invest  1,114  in Leader Total Return on October 8, 2024 and sell it today you would lose (1.00) from holding Leader Total Return or give up 0.09% of portfolio value over 90 days.

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

Kinetics Paradigm Fund  vs.  Leader Total Return

Kinetics Paradigm

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Paradigm showed solid returns over the last few months and may actually be approaching a breakup point.

Leader Total Return

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leader Total Return are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leader Total 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 Leader Total

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

The idea behind Kinetics Paradigm Fund and Leader Total Return 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.