Correlation Between Kinetics Small and Growth Fund

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

Diversification Opportunities for Kinetics Small and Growth Fund

0.71

Correlation Coefficient

Kinetics Small  Growth Fund

Poor diversification

The 3 months correlation between Kinetics and Growth is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Growth Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund has no effect on the direction of Kinetics Small i.e., Kinetics Small and Growth Fund go up and down completely randomly.

Pair Corralation between Kinetics Small and Growth Fund

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Growth Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kinetics Small Cap is 1.02 times less risky than Growth Fund. The mutual fund trades about -0.49 of its potential returns per unit of risk. The Growth Fund Of is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  8,066  in Growth Fund Of on September 23, 2024 and sell it today you would lose (635.00) from holding Growth Fund Of or give up 7.87% of portfolio value over 90 days.

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

Kinetics Small Cap  vs.  Growth Fund Of

Kinetics Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap 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 Small showed solid returns over the last few months and may actually be approaching a breakup point.

Growth Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Growth Fund Of has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Growth Fund 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 Growth Fund

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

The idea behind Kinetics Small Cap and Growth Fund Of 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.