Correlation Between Kinetics Paradigm and Marsico Midcap

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

Diversification Opportunities for Kinetics Paradigm and Marsico Midcap

0.86

Correlation Coefficient

Kinetics Paradigm  Marsico Midcap

Very poor diversification

The 3 months correlation between Kinetics and Marsico is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Marsico Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Midcap Growth 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 Marsico Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Midcap Growth has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Marsico Midcap go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Marsico Midcap

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 2.64 times more return on investment than Marsico Midcap. However, Kinetics Paradigm is 2.64 times more volatile than Marsico Midcap Growth. It trades about 0.11 of its potential returns per unit of risk. Marsico Midcap Growth is currently generating about 0.19 per unit of risk. If you would invest  11,598  in Kinetics Paradigm Fund on September 20, 2024 and sell it today you would earn a total of  2,278  from holding Kinetics Paradigm Fund or generate 19.64% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Marsico Midcap Growth

Kinetics Paradigm

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 8 (%) 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.

Marsico Midcap Growth

Risk-Adjusted Performance

15 of 100

Good

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

Pair Trading with Kinetics Paradigm and Marsico Midcap

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

The idea behind Kinetics Paradigm Fund and Marsico Midcap Growth 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.