Correlation Between Kinetics Paradigm and Jacob Micro

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

Diversification Opportunities for Kinetics Paradigm and Jacob Micro

0.82

Correlation Coefficient

Kinetics Paradigm  Jacob Micro

Very poor diversification

The 3 months correlation between Kinetics and Jacob is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Jacob Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Micro Cap 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 Jacob Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Micro Cap has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Jacob Micro go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Jacob Micro

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 1.38 times more return on investment than Jacob Micro. However, Kinetics Paradigm is 1.38 times more volatile than Jacob Micro Cap. It trades about 0.05 of its potential returns per unit of risk. Jacob Micro Cap is currently generating about 0.04 per unit of risk. If you would invest  9,963  in Kinetics Paradigm Fund on September 16, 2024 and sell it today you would earn a total of  5,023  from holding Kinetics Paradigm Fund or generate 50.42% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Jacob Micro Cap

Kinetics Paradigm

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 15 (%) 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.

Jacob Micro Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Micro Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jacob Micro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kinetics Paradigm and Jacob Micro

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

The idea behind Kinetics Paradigm Fund and Jacob Micro Cap 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.