Correlation Between Kinetics Small and Clarkston Partners

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

Diversification Opportunities for Kinetics Small and Clarkston Partners

0.56

Correlation Coefficient

Kinetics Small  Clarkston Partners

Very weak diversification

The 3 months correlation between Kinetics and Clarkston is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Clarkston Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarkston Partners 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 Clarkston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarkston Partners has no effect on the direction of Kinetics Small i.e., Kinetics Small and Clarkston Partners go up and down completely randomly.

Pair Corralation between Kinetics Small and Clarkston Partners

Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Clarkston Partners. In addition to that, Kinetics Small is 3.06 times more volatile than Clarkston Partners Fund. It trades about -0.1 of its total potential returns per unit of risk. Clarkston Partners Fund is currently generating about -0.24 per unit of volatility. If you would invest  1,537  in Clarkston Partners Fund on November 29, 2024 and sell it today you would lose (148.00) from holding Clarkston Partners Fund or give up 9.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Kinetics Small Cap  vs.  Clarkston Partners Fund

Kinetics Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Clarkston Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clarkston Partners Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Kinetics Small and Clarkston Partners

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

The idea behind Kinetics Small Cap and Clarkston Partners 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.