Correlation Between Kinetics Paradigm and Copeland Smid

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

Diversification Opportunities for Kinetics Paradigm and Copeland Smid

0.86

Correlation Coefficient

Kinetics Paradigm  Copeland Smid

Very poor diversification

The 3 months correlation between Kinetics and Copeland is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Copeland Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copeland Smid Cap 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 Copeland Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copeland Smid Cap has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Copeland Smid go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Copeland Smid

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 3.0 times more return on investment than Copeland Smid. However, Kinetics Paradigm is 3.0 times more volatile than Copeland Smid Cap. It trades about 0.22 of its potential returns per unit of risk. Copeland Smid Cap is currently generating about 0.06 per unit of risk. If you would invest  8,843  in Kinetics Paradigm Fund on September 13, 2024 and sell it today you would earn a total of  3,761  from holding Kinetics Paradigm Fund or generate 42.53% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Copeland Smid Cap

Kinetics Paradigm

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund 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 Paradigm showed solid returns over the last few months and may actually be approaching a breakup point.

Copeland Smid Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Copeland Smid Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Copeland Smid 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 Copeland Smid

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

The idea behind Kinetics Paradigm Fund and Copeland Smid 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.