Correlation Between Kinetics Global and Touchstone Large

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

Diversification Opportunities for Kinetics Global and Touchstone Large

0.89

Correlation Coefficient

Kinetics Global  Touchstone Large

Very poor diversification

The 3 months correlation between Kinetics and Touchstone is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Global Fund and Touchstone Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Large Cap 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 Touchstone Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Large Cap has no effect on the direction of Kinetics Global i.e., Kinetics Global and Touchstone Large go up and down completely randomly.

Pair Corralation between Kinetics Global and Touchstone Large

Assuming the 90 days horizon Kinetics Global Fund is expected to generate 1.8 times more return on investment than Touchstone Large. However, Kinetics Global is 1.8 times more volatile than Touchstone Large Cap. It trades about 0.12 of its potential returns per unit of risk. Touchstone Large Cap is currently generating about 0.08 per unit of risk. If you would invest  770.00  in Kinetics Global Fund on September 19, 2024 and sell it today you would earn a total of  787.00  from holding Kinetics Global Fund or generate 102.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Kinetics Global Fund  vs.  Touchstone Large Cap

Kinetics Global

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Global Fund are ranked lower than 20 (%) 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.

Touchstone Large Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Touchstone Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kinetics Global and Touchstone Large

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

The idea behind Kinetics Global Fund and Touchstone Large Cap 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.