Correlation Between Kinetics Paradigm and Marsico 21st

Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Marsico 21st 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 Marsico 21st 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 Marsico 21st Century, you can compare the effects of market volatilities on Kinetics Paradigm and Marsico 21st 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 Marsico 21st. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Marsico 21st.

Diversification Opportunities for Kinetics Paradigm and Marsico 21st

0.87

Correlation Coefficient

Kinetics Paradigm  Marsico 21st

Very poor diversification

The 3 months correlation between Kinetics and Marsico is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Marsico 21st Century in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico 21st Century 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 Marsico 21st. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico 21st Century has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Marsico 21st go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Marsico 21st

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Marsico 21st. In addition to that, Kinetics Paradigm is 1.96 times more volatile than Marsico 21st Century. It trades about -0.36 of its total potential returns per unit of risk. Marsico 21st Century is currently generating about -0.21 per unit of volatility. If you would invest  5,503  in Marsico 21st Century on September 26, 2024 and sell it today you would lose (380.00) from holding Marsico 21st Century or give up 6.91% of portfolio value over 90 days.

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

Kinetics Paradigm Fund  vs.  Marsico 21st Century

Kinetics Paradigm

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Kinetics Paradigm showed solid returns over the last few months and may actually be approaching a breakup point.

Marsico 21st Century

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marsico 21st Century are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Marsico 21st may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kinetics Paradigm and Marsico 21st

The main advantage of trading using opposite Kinetics Paradigm and Marsico 21st positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Paradigm position performs unexpectedly, Marsico 21st 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 Marsico 21st will offset losses from the drop in Marsico 21st's long position.

The idea behind Kinetics Paradigm Fund and Marsico 21st Century 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.