Correlation Between Kinetics Market and Mid Cap

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

Diversification Opportunities for Kinetics Market and Mid Cap

0.94

Correlation Coefficient

Kinetics Market  Mid Cap

Almost no diversification

The 3 months correlation between Kinetics and Mid is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Mid Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Value 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Value has no effect on the direction of Kinetics Market i.e., Kinetics Market and Mid Cap go up and down completely randomly.

Pair Corralation between Kinetics Market and Mid Cap

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 2.52 times more return on investment than Mid Cap. However, Kinetics Market is 2.52 times more volatile than Mid Cap Value Profund. It trades about 0.21 of its potential returns per unit of risk. Mid Cap Value Profund is currently generating about 0.12 per unit of risk. If you would invest  5,634  in Kinetics Market Opportunities on September 17, 2024 and sell it today you would earn a total of  2,016  from holding Kinetics Market Opportunities or generate 35.78% return on investment over 90 days.

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

Kinetics Market Opportunities  vs.  Mid Cap Value Profund

Kinetics Market Oppo

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Market Opportunities are ranked lower than 16 (%) 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.

Mid Cap Value

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Value Profund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kinetics Market and Mid Cap

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

The idea behind Kinetics Market Opportunities and Mid Cap Value Profund 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.