Correlation Between Kinetics Paradigm and Royce Total

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

Diversification Opportunities for Kinetics Paradigm and Royce Total

0.91

Correlation Coefficient

Kinetics Paradigm  Royce Total

Almost no diversification

The 3 months correlation between Kinetics and Royce is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Royce Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Total Return 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 Royce Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Total Return has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Royce Total go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Royce Total

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 2.24 times more return on investment than Royce Total. However, Kinetics Paradigm is 2.24 times more volatile than Royce Total Return. It trades about 0.22 of its potential returns per unit of risk. Royce Total Return is currently generating about 0.19 per unit of risk. If you would invest  10,398  in Kinetics Paradigm Fund on September 12, 2024 and sell it today you would earn a total of  4,712  from holding Kinetics Paradigm Fund or generate 45.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Kinetics Paradigm Fund  vs.  Royce Total Return

Kinetics Paradigm

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 17 (%) 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.

Royce Total Return

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royce Total Return are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Royce Total showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetics Paradigm and Royce Total

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

The idea behind Kinetics Paradigm Fund and Royce Total Return 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.