Correlation Between Moderate Balanced and Kinetics Global

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

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

Diversification Opportunities for Moderate Balanced and Kinetics Global

0.66

Correlation Coefficient

Moderate Balanced  Kinetics Global

Poor diversification

The 3 months correlation between Moderate and Kinetics is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced Allocation and Kinetics Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Global and Moderate Balanced 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 Moderate Balanced Allocation 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 Moderate Balanced i.e., Moderate Balanced and Kinetics Global go up and down completely randomly.

Pair Corralation between Moderate Balanced and Kinetics Global

Assuming the 90 days horizon Moderate Balanced Allocation is expected to under-perform the Kinetics Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Moderate Balanced Allocation is 1.92 times less risky than Kinetics Global. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Kinetics Global Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,469  in Kinetics Global Fund on December 22, 2024 and sell it today you would earn a total of  62.00  from holding Kinetics Global Fund or generate 4.22% return on investment over 90 days.

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

Moderate Balanced Allocation  vs.  Kinetics Global Fund

Moderate Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Moderate Balanced Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Moderate Balanced 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

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 4 (%) 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 Moderate Balanced and Kinetics Global

The main advantage of trading using opposite Moderate Balanced and Kinetics Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderate Balanced 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 Moderate Balanced Allocation 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.