Correlation Between Kinetics Paradigm and Putnam Convertible

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

Diversification Opportunities for Kinetics Paradigm and Putnam Convertible

0.92

Correlation Coefficient

Kinetics Paradigm  Putnam Convertible

Almost no diversification

The 3 months correlation between Kinetics and Putnam is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Putnam Convertible Incm Gwth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Convertible Incm 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 Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Convertible Incm has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Putnam Convertible go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Putnam Convertible

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 5.73 times more return on investment than Putnam Convertible. However, Kinetics Paradigm is 5.73 times more volatile than Putnam Convertible Incm Gwth. It trades about 0.2 of its potential returns per unit of risk. Putnam Convertible Incm Gwth is currently generating about 0.22 per unit of risk. If you would invest  10,813  in Kinetics Paradigm Fund on September 16, 2024 and sell it today you would earn a total of  4,173  from holding Kinetics Paradigm Fund or generate 38.59% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Putnam Convertible Incm Gwth

Kinetics Paradigm

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 15 (%) 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.

Putnam Convertible Incm

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam Convertible Incm Gwth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Putnam Convertible may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kinetics Paradigm and Putnam Convertible

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

The idea behind Kinetics Paradigm Fund and Putnam Convertible Incm Gwth 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.