Correlation Between Commodities Strategy and Kinetics Spin-off

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

By analyzing existing cross correlation between Commodities Strategy Fund and Kinetics Spin Off And, you can compare the effects of market volatilities on Commodities Strategy and Kinetics Spin-off 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 Commodities Strategy with a short position of Kinetics Spin-off. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commodities Strategy and Kinetics Spin-off.

Diversification Opportunities for Commodities Strategy and Kinetics Spin-off

0.3

Correlation Coefficient

Commodities Strategy  Kinetics Spin-off

Weak diversification

The 3 months correlation between Commodities and Kinetics is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Commodities Strategy Fund and Kinetics Spin Off And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Spin Off and Commodities Strategy 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 Commodities Strategy Fund are associated (or correlated) with Kinetics Spin-off. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Spin Off has no effect on the direction of Commodities Strategy i.e., Commodities Strategy and Kinetics Spin-off go up and down completely randomly.

Pair Corralation between Commodities Strategy and Kinetics Spin-off

Assuming the 90 days horizon Commodities Strategy is expected to generate 17.53 times less return on investment than Kinetics Spin-off. But when comparing it to its historical volatility, Commodities Strategy Fund is 2.0 times less risky than Kinetics Spin-off. It trades about 0.04 of its potential returns per unit of risk. Kinetics Spin Off And is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest  2,793  in Kinetics Spin Off And on September 3, 2024 and sell it today you would earn a total of  1,989  from holding Kinetics Spin Off And or generate 71.21% return on investment over 90 days.

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

Commodities Strategy Fund  vs.  Kinetics Spin Off And

Commodities Strategy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Commodities Strategy Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Commodities Strategy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kinetics Spin Off

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Spin Off And are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Kinetics Spin-off showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Commodities Strategy and Kinetics Spin-off

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

The idea behind Commodities Strategy Fund and Kinetics Spin Off And 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.

Check out your portfolio center.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.