Correlation Between City National and Kinetics Global

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

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

Diversification Opportunities for City National and Kinetics Global

0.6

Correlation Coefficient

City National  Kinetics Global

Poor diversification

The 3 months correlation between City and Kinetics is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding City National Rochdale and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and City National 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 City National Rochdale 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 City National i.e., City National and Kinetics Global go up and down completely randomly.

Pair Corralation between City National and Kinetics Global

Assuming the 90 days horizon City National Rochdale is expected to generate 0.05 times more return on investment than Kinetics Global. However, City National Rochdale is 20.34 times less risky than Kinetics Global. It trades about 0.03 of its potential returns per unit of risk. Kinetics Global Fund is currently generating about -0.23 per unit of risk. If you would invest  1,976  in City National Rochdale on September 26, 2024 and sell it today you would earn a total of  1.00  from holding City National Rochdale or generate 0.05% return on investment over 90 days.

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

City National Rochdale  vs.  Kinetics Global Fund

City National Rochdale

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in City National Rochdale are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, City National 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

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with City National and Kinetics Global

The main advantage of trading using opposite City National and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City National 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 City National Rochdale 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.