Correlation Between Kinetics Paradigm and Kinetics Market

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

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

Diversification Opportunities for Kinetics Paradigm and Kinetics Market

0.98

Correlation Coefficient

Kinetics Paradigm  Kinetics Market

Almost no diversification

The 3 months correlation between Kinetics and Kinetics is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Kinetics Market Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Market Oppo and Kinetics Paradigm 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 Paradigm Fund are associated (or correlated) with Kinetics Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Market Oppo has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Kinetics Market go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Kinetics Market

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Kinetics Market. In addition to that, Kinetics Paradigm is 1.21 times more volatile than Kinetics Market Opportunities. It trades about -0.12 of its total potential returns per unit of risk. Kinetics Market Opportunities is currently generating about -0.11 per unit of volatility. If you would invest  8,958  in Kinetics Market Opportunities on November 28, 2024 and sell it today you would lose (1,229) from holding Kinetics Market Opportunities or give up 13.72% of portfolio value over 90 days.

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

Kinetics Paradigm Fund  vs.  Kinetics Market Opportunities

Kinetics Paradigm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Paradigm Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Kinetics Market Oppo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Market Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Kinetics Paradigm and Kinetics Market

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

The idea behind Kinetics Paradigm Fund and Kinetics Market Opportunities 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.