Correlation Between Kinetics Paradigm and Horizon Spin-off

Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Horizon Spin-off 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 Horizon Spin-off 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 Horizon Spin Off And, you can compare the effects of market volatilities on Kinetics Paradigm and Horizon Spin-off 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 Horizon Spin-off. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Horizon Spin-off.

Diversification Opportunities for Kinetics Paradigm and Horizon Spin-off

1.0

Correlation Coefficient

Kinetics Paradigm  Horizon Spin-off

No risk reduction

The 3 months correlation between Kinetics and Horizon is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Horizon Spin Off And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Spin Off 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 Horizon Spin-off. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Spin Off has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Horizon Spin-off go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Horizon Spin-off

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Horizon Spin-off. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kinetics Paradigm Fund is 1.07 times less risky than Horizon Spin-off. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Horizon Spin Off And is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  4,267  in Horizon Spin Off And on December 2, 2024 and sell it today you would lose (362.00) from holding Horizon Spin Off And or give up 8.48% 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.  Horizon Spin Off And

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Horizon Spin Off

Risk-Adjusted Performance

Very Weak

Over the last 90 days Horizon Spin Off And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Kinetics Paradigm and Horizon Spin-off

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

The idea behind Kinetics Paradigm Fund and Horizon Spin Off And 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.