Correlation Between Kinetics Small and Eventide Gilead

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

Diversification Opportunities for Kinetics Small and Eventide Gilead

0.77

Correlation Coefficient

Kinetics Small  Eventide Gilead

Poor diversification

The 3 months correlation between Kinetics and Eventide is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Eventide Gilead Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Gilead 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 Eventide Gilead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Gilead has no effect on the direction of Kinetics Small i.e., Kinetics Small and Eventide Gilead go up and down completely randomly.

Pair Corralation between Kinetics Small and Eventide Gilead

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 1.36 times more return on investment than Eventide Gilead. However, Kinetics Small is 1.36 times more volatile than Eventide Gilead Fund. It trades about 0.08 of its potential returns per unit of risk. Eventide Gilead Fund is currently generating about 0.04 per unit of risk. If you would invest  10,761  in Kinetics Small Cap on October 5, 2024 and sell it today you would earn a total of  7,305  from holding Kinetics Small Cap or generate 67.88% return on investment over 90 days.

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

Kinetics Small Cap  vs.  Eventide Gilead Fund

Kinetics Small Cap

Risk-Adjusted Performance

5 of 100

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 February 2025.

Eventide Gilead

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eventide Gilead Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Eventide Gilead 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 Eventide Gilead

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

The idea behind Kinetics Small Cap and Eventide Gilead 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.