Correlation Between Kinetics Paradigm and Blackrock Muniyield

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

Diversification Opportunities for Kinetics Paradigm and Blackrock Muniyield

0.54

Correlation Coefficient

Kinetics Paradigm  Blackrock Muniyield

Very weak diversification

The 3 months correlation between Kinetics and Blackrock is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield 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 Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Blackrock Muniyield

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 4.43 times more return on investment than Blackrock Muniyield. However, Kinetics Paradigm is 4.43 times more volatile than Blackrock Muniyield Quality. It trades about 0.08 of its potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about 0.12 per unit of risk. If you would invest  13,612  in Kinetics Paradigm Fund on December 30, 2024 and sell it today you would earn a total of  1,504  from holding Kinetics Paradigm Fund or generate 11.05% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Blackrock Muniyield Quality

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 basic indicators, Kinetics Paradigm showed solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Muniyield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield Quality are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Muniyield 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 Blackrock Muniyield

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

The idea behind Kinetics Paradigm Fund and Blackrock Muniyield Quality 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.