Correlation Between Kinetics Small and Grizzly Short

Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Grizzly Short 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 Small and Grizzly Short into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Small Cap and Grizzly Short Fund, you can compare the effects of market volatilities on Kinetics Small and Grizzly Short 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 Small with a short position of Grizzly Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Grizzly Short.

Diversification Opportunities for Kinetics Small and Grizzly Short

-0.32

Correlation Coefficient

Kinetics Small  Grizzly Short

Very good diversification

The 3 months correlation between Kinetics and Grizzly is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Grizzly Short Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grizzly Short and Kinetics Small 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 Small Cap are associated (or correlated) with Grizzly Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grizzly Short has no effect on the direction of Kinetics Small i.e., Kinetics Small and Grizzly Short go up and down completely randomly.

Pair Corralation between Kinetics Small and Grizzly Short

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 2.22 times more return on investment than Grizzly Short. However, Kinetics Small is 2.22 times more volatile than Grizzly Short Fund. It trades about 0.07 of its potential returns per unit of risk. Grizzly Short Fund is currently generating about 0.1 per unit of risk. If you would invest  17,004  in Kinetics Small Cap on December 30, 2024 and sell it today you would earn a total of  1,451  from holding Kinetics Small Cap or generate 8.53% return on investment over 90 days.

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

Kinetics Small Cap  vs.  Grizzly Short Fund

Kinetics Small Cap

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Small may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Grizzly Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grizzly Short Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Grizzly Short 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 Small and Grizzly Short

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

The idea behind Kinetics Small Cap and Grizzly Short 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.