Correlation Between Aqr Global and Kinetics Global

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

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

Diversification Opportunities for Aqr Global and Kinetics Global

-0.09

Correlation Coefficient

Aqr Global  Kinetics Global

Good diversification

The 3 months correlation between Aqr and Kinetics is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aqr Global Macro and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Aqr Global 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 Aqr Global Macro are associated (or correlated) with Kinetics Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Global has no effect on the direction of Aqr Global i.e., Aqr Global and Kinetics Global go up and down completely randomly.

Pair Corralation between Aqr Global and Kinetics Global

Assuming the 90 days horizon Aqr Global Macro is expected to generate 0.38 times more return on investment than Kinetics Global. However, Aqr Global Macro is 2.61 times less risky than Kinetics Global. It trades about 0.31 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about 0.02 per unit of risk. If you would invest  933.00  in Aqr Global Macro on December 20, 2024 and sell it today you would earn a total of  85.00  from holding Aqr Global Macro or generate 9.11% return on investment over 90 days.

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

Aqr Global Macro  vs.  Kinetics Global Fund

Aqr Global Macro

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Global Macro are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Aqr Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Kinetics Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Kinetics Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aqr Global and Kinetics Global

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

The idea behind Aqr Global Macro and Kinetics Global 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.