Correlation Between Kinetics Spin and Royce Opportunity

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

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

Diversification Opportunities for Kinetics Spin and Royce Opportunity

0.07

Correlation Coefficient

Kinetics Spin  Royce Opportunity

Significant diversification

The 3 months correlation between Kinetics and ROYCE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Spin Off And and Royce Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Opportunity and Kinetics Spin 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 Spin Off And are associated (or correlated) with Royce Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Opportunity has no effect on the direction of Kinetics Spin i.e., Kinetics Spin and Royce Opportunity go up and down completely randomly.

Pair Corralation between Kinetics Spin and Royce Opportunity

Assuming the 90 days horizon Kinetics Spin Off And is expected to generate 1.89 times more return on investment than Royce Opportunity. However, Kinetics Spin is 1.89 times more volatile than Royce Opportunity Fund. It trades about 0.09 of its potential returns per unit of risk. Royce Opportunity Fund is currently generating about -0.14 per unit of risk. If you would invest  3,402  in Kinetics Spin Off And on December 29, 2024 and sell it today you would earn a total of  435.00  from holding Kinetics Spin Off And or generate 12.79% return on investment over 90 days.

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

Kinetics Spin Off And  vs.  Royce Opportunity Fund

Kinetics Spin Off

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Spin Off And are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Kinetics Spin showed solid returns over the last few months and may actually be approaching a breakup point.

Royce Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Opportunity Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Spin and Royce Opportunity

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

The idea behind Kinetics Spin Off And and Royce Opportunity 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.