Correlation Between Kinetics Small and Doubleline Long

Can any of the company-specific risk be diversified away by investing in both Kinetics Small and Doubleline Long 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 Small and Doubleline Long into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kinetics Small Cap and Doubleline Long Duration, you can compare the effects of market volatilities on Kinetics Small and Doubleline Long 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 Small with a short position of Doubleline Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Doubleline Long.

Diversification Opportunities for Kinetics Small and Doubleline Long

-0.84

Correlation Coefficient

Kinetics Small  Doubleline Long

Pay attention - limited upside

The 3 months correlation between Kinetics and Doubleline is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap and Doubleline Long Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Long Duration and Kinetics Small 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 Small Cap are associated (or correlated) with Doubleline Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Long Duration has no effect on the direction of Kinetics Small i.e., Kinetics Small and Doubleline Long go up and down completely randomly.

Pair Corralation between Kinetics Small and Doubleline Long

Assuming the 90 days horizon Kinetics Small Cap is expected to generate 3.11 times more return on investment than Doubleline Long. However, Kinetics Small is 3.11 times more volatile than Doubleline Long Duration. It trades about 0.39 of its potential returns per unit of risk. Doubleline Long Duration is currently generating about 0.07 per unit of risk. If you would invest  16,083  in Kinetics Small Cap on August 31, 2024 and sell it today you would earn a total of  4,107  from holding Kinetics Small Cap or generate 25.54% return on investment over 90 days.

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

Kinetics Small Cap  vs.  Doubleline Long Duration

Kinetics Small Cap

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Small Cap are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Kinetics Small showed solid returns over the last few months and may actually be approaching a breakup point.

Doubleline Long Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Doubleline Long Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Doubleline Long 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 Small and Doubleline Long

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

The idea behind Kinetics Small Cap and Doubleline Long Duration 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .