Correlation Between Kinetics Market and Kinetics Small

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

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

Diversification Opportunities for Kinetics Market and Kinetics Small

0.8

Correlation Coefficient

Kinetics Market  Kinetics Small

Very poor diversification

The 3 months correlation between Kinetics and Kinetics is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Market Opportunities and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Kinetics Market 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 Market Opportunities are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Kinetics Market i.e., Kinetics Market and Kinetics Small go up and down completely randomly.

Pair Corralation between Kinetics Market and Kinetics Small

Assuming the 90 days horizon Kinetics Market Opportunities is expected to generate 0.82 times more return on investment than Kinetics Small. However, Kinetics Market Opportunities is 1.23 times less risky than Kinetics Small. It trades about -0.14 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about -0.2 per unit of risk. If you would invest  7,928  in Kinetics Market Opportunities on May 4, 2025 and sell it today you would lose (702.00) from holding Kinetics Market Opportunities or give up 8.85% of portfolio value over 90 days.

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

Kinetics Market Opportunities  vs.  Kinetics Small Cap

Kinetics Market Oppo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Market Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Kinetics Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Kinetics Market and Kinetics Small

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

The idea behind Kinetics Market Opportunities and Kinetics Small Cap 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.