Correlation Between Kinetics Paradigm and Needham Growth

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

Diversification Opportunities for Kinetics Paradigm and Needham Growth

-0.66

Correlation Coefficient

Kinetics Paradigm  Needham Growth

Excellent diversification

The 3 months correlation between Kinetics and Needham is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Needham Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth 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 Needham Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Growth has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Needham Growth go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Needham Growth

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Needham Growth. In addition to that, Kinetics Paradigm is 2.24 times more volatile than Needham Growth. It trades about -0.48 of its total potential returns per unit of risk. Needham Growth is currently generating about -0.11 per unit of volatility. If you would invest  6,652  in Needham Growth on September 23, 2024 and sell it today you would lose (233.00) from holding Needham Growth or give up 3.5% of portfolio value over 90 days.

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

Kinetics Paradigm Fund  vs.  Needham Growth

Kinetics Paradigm

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 8 (%) 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.

Needham Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Needham Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Kinetics Paradigm and Needham Growth

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

The idea behind Kinetics Paradigm Fund and Needham Growth 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.