Correlation Between Kinetics Market and Elfun Trusts

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

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

Diversification Opportunities for Kinetics Market and Elfun Trusts

0.84

Correlation Coefficient

Kinetics Market  Elfun Trusts

Very poor diversification

The 3 months correlation between Kinetics and Elfun is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Elfun Trusts Elfun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Trusts Elfun and Kinetics Market 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 Market Opportunities are associated (or correlated) with Elfun Trusts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Trusts Elfun has no effect on the direction of Kinetics Market i.e., Kinetics Market and Elfun Trusts go up and down completely randomly.

Pair Corralation between Kinetics Market and Elfun Trusts

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 3.43 times more return on investment than Elfun Trusts. However, Kinetics Market is 3.43 times more volatile than Elfun Trusts Elfun. It trades about 0.23 of its potential returns per unit of risk. Elfun Trusts Elfun is currently generating about 0.15 per unit of risk. If you would invest  5,460  in Kinetics Market Opportunities on September 14, 2024 and sell it today you would earn a total of  2,147  from holding Kinetics Market Opportunities or generate 39.32% return on investment over 90 days.

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

Kinetics Market Opportunities  vs.  Elfun Trusts Elfun

Kinetics Market Oppo

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Market showed solid returns over the last few months and may actually be approaching a breakup point.

Elfun Trusts Elfun

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Trusts Elfun are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Elfun Trusts may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kinetics Market and Elfun Trusts

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

The idea behind Kinetics Market Opportunities and Elfun Trusts Elfun 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.