Correlation Between Kinetics Paradigm and Champlain Small

Can any of the company-specific risk be diversified away by investing in both Kinetics Paradigm and Champlain 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 Paradigm and Champlain Small 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 Champlain Small Pany, you can compare the effects of market volatilities on Kinetics Paradigm and Champlain 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 Paradigm with a short position of Champlain Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Paradigm and Champlain Small.

Diversification Opportunities for Kinetics Paradigm and Champlain Small

0.79

Correlation Coefficient

Kinetics Paradigm  Champlain Small

Poor diversification

The 3 months correlation between Kinetics and Champlain is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Paradigm Fund and Champlain Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small Pany 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 Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small Pany has no effect on the direction of Kinetics Paradigm i.e., Kinetics Paradigm and Champlain Small go up and down completely randomly.

Pair Corralation between Kinetics Paradigm and Champlain Small

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 1.93 times more return on investment than Champlain Small. However, Kinetics Paradigm is 1.93 times more volatile than Champlain Small Pany. It trades about 0.1 of its potential returns per unit of risk. Champlain Small Pany is currently generating about 0.02 per unit of risk. If you would invest  7,133  in Kinetics Paradigm Fund on February 8, 2025 and sell it today you would earn a total of  5,565  from holding Kinetics Paradigm Fund or generate 78.02% return on investment over 90 days.

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

Kinetics Paradigm Fund  vs.  Champlain Small Pany

Kinetics Paradigm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kinetics Paradigm Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Kinetics Paradigm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Champlain Small Pany

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kinetics Paradigm and Champlain Small

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

The idea behind Kinetics Paradigm Fund and Champlain Small Pany 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.