Correlation Between Europacific Growth and Kinetics Global

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

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

Diversification Opportunities for Europacific Growth and Kinetics Global

0.39

Correlation Coefficient

Europacific Growth  Kinetics Global

Weak diversification

The 3 months correlation between Europacific and Kinetics is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Europacific Growth 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 Europacific Growth Fund 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 Europacific Growth i.e., Europacific Growth and Kinetics Global go up and down completely randomly.

Pair Corralation between Europacific Growth and Kinetics Global

Assuming the 90 days horizon Europacific Growth Fund is expected to generate 0.77 times more return on investment than Kinetics Global. However, Europacific Growth Fund is 1.3 times less risky than Kinetics Global. It trades about 0.09 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about 0.03 per unit of risk. If you would invest  5,134  in Europacific Growth Fund on December 22, 2024 and sell it today you would earn a total of  256.00  from holding Europacific Growth Fund or generate 4.99% return on investment over 90 days.

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

Europacific Growth Fund  vs.  Kinetics Global Fund

Europacific Growth

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Europacific Growth Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Europacific Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 2 (%) 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Europacific Growth and Kinetics Global

The main advantage of trading using opposite Europacific Growth and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europacific Growth 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 Europacific Growth Fund 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.