Correlation Between Kinetics Global and Pace Smallmedium

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

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

Diversification Opportunities for Kinetics Global and Pace Smallmedium

0.22

Correlation Coefficient

Kinetics Global  Pace Smallmedium

Modest diversification

The 3 months correlation between Kinetics and Pace is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Pace Smallmedium Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Smallmedium Value and Kinetics Global 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 Global Fund are associated (or correlated) with Pace Smallmedium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Smallmedium Value has no effect on the direction of Kinetics Global i.e., Kinetics Global and Pace Smallmedium go up and down completely randomly.

Pair Corralation between Kinetics Global and Pace Smallmedium

Assuming the 90 days horizon Kinetics Global Fund is expected to generate 0.46 times more return on investment than Pace Smallmedium. However, Kinetics Global Fund is 2.17 times less risky than Pace Smallmedium. It trades about -0.18 of its potential returns per unit of risk. Pace Smallmedium Value is currently generating about -0.31 per unit of risk. If you would invest  1,607  in Kinetics Global Fund on September 27, 2024 and sell it today you would lose (102.00) from holding Kinetics Global Fund or give up 6.35% of portfolio value over 90 days.

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

Kinetics Global Fund  vs.  Pace Smallmedium Value

Kinetics Global

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 15 (%) 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.

Pace Smallmedium Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace Smallmedium Value 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 January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Kinetics Global and Pace Smallmedium

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

The idea behind Kinetics Global Fund and Pace Smallmedium Value 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.