Correlation Between Kinetics Paradigm and Shelton Green

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

Diversification Opportunities for Kinetics Paradigm and Shelton Green

0.57

Correlation Coefficient

Kinetics Paradigm  Shelton Green

Very weak diversification

The 3 months correlation between Kinetics and Shelton is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Shelton Green Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Green Alpha 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 Shelton Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Green Alpha has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Shelton Green go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Shelton Green

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to under-perform the Shelton Green. In addition to that, Kinetics Paradigm is 4.62 times more volatile than Shelton Green Alpha. It trades about -0.11 of its total potential returns per unit of risk. Shelton Green Alpha is currently generating about -0.03 per unit of volatility. If you would invest  3,213  in Shelton Green Alpha on September 20, 2024 and sell it today you would lose (20.00) from holding Shelton Green Alpha or give up 0.62% of portfolio value over 90 days.

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

Kinetics Paradigm Fund  vs.  Shelton Green Alpha

Kinetics Paradigm

Risk-Adjusted Performance

12 of 100

Good

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.

Shelton Green Alpha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelton Green Alpha has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Shelton Green 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 Paradigm and Shelton Green

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

The idea behind Kinetics Paradigm Fund and Shelton Green Alpha 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.