Correlation Between Kinetics Internet and Jacob Internet

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

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

Diversification Opportunities for Kinetics Internet and Jacob Internet

0.95

Correlation Coefficient

Kinetics Internet  Jacob Internet

Almost no diversification

The 3 months correlation between Kinetics and Jacob is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Internet Fund and Jacob Internet Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Internet and Kinetics Internet 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 Internet Fund are associated (or correlated) with Jacob Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Internet has no effect on the direction of Kinetics Internet i.e., Kinetics Internet and Jacob Internet go up and down completely randomly.

Pair Corralation between Kinetics Internet and Jacob Internet

Assuming the 90 days horizon Kinetics Internet Fund is expected to generate 0.85 times more return on investment than Jacob Internet. However, Kinetics Internet Fund is 1.17 times less risky than Jacob Internet. It trades about 0.12 of its potential returns per unit of risk. Jacob Internet Fund is currently generating about 0.06 per unit of risk. If you would invest  4,695  in Kinetics Internet Fund on September 13, 2024 and sell it today you would earn a total of  6,390  from holding Kinetics Internet Fund or generate 136.1% return on investment over 90 days.

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

Kinetics Internet Fund  vs.  Jacob Internet Fund

Kinetics Internet

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Internet Fund are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Kinetics Internet showed solid returns over the last few months and may actually be approaching a breakup point.

Jacob Internet

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Internet Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jacob Internet showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kinetics Internet and Jacob Internet

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

The idea behind Kinetics Internet Fund and Jacob Internet Fund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.