Correlation Between Kinetics Paradigm and Harbor International

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

Diversification Opportunities for Kinetics Paradigm and Harbor International

0.27

Correlation Coefficient

Kinetics Paradigm  Harbor International

Modest diversification

The 3 months correlation between Kinetics and HARBOR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Harbor International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor 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 Harbor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor International has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Harbor International go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Harbor International

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Harbor International. In addition to that, Kinetics Paradigm is 3.57 times more volatile than Harbor International Fund. It trades about -0.04 of its total potential returns per unit of risk. Harbor International Fund is currently generating about 0.07 per unit of volatility. If you would invest  4,667  in Harbor International Fund on December 1, 2024 and sell it today you would earn a total of  148.00  from holding Harbor International Fund or generate 3.17% 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.  Harbor International Fund

Kinetics Paradigm

Risk-Adjusted Performance

Very Weak

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

Harbor International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor International Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Harbor 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 Harbor International

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

The idea behind Kinetics Paradigm Fund and Harbor 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.