Correlation Between Kinetics Paradigm and Pimco Municipal

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

Diversification Opportunities for Kinetics Paradigm and Pimco Municipal

-0.59

Correlation Coefficient

Kinetics Paradigm  Pimco Municipal

Excellent diversification

The 3 months correlation between Kinetics and Pimco is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Pimco Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Municipal Income 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 Pimco Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Municipal Income has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Pimco Municipal go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Pimco Municipal

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 2.51 times more return on investment than Pimco Municipal. However, Kinetics Paradigm is 2.51 times more volatile than Pimco Municipal Income. It trades about 0.4 of its potential returns per unit of risk. Pimco Municipal Income is currently generating about 0.0 per unit of risk. If you would invest  10,514  in Kinetics Paradigm Fund on September 3, 2024 and sell it today you would earn a total of  8,046  from holding Kinetics Paradigm Fund or generate 76.53% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Pimco Municipal Income

Kinetics Paradigm

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 31 (%) 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.

Pimco Municipal Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Municipal Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Pimco Municipal 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 Pimco Municipal

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

The idea behind Kinetics Paradigm Fund and Pimco Municipal Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.