Correlation Between Kinetics Paradigm and Boston Partners

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

Diversification Opportunities for Kinetics Paradigm and Boston Partners

0.79

Correlation Coefficient

Kinetics Paradigm  Boston Partners

Poor diversification

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

Pair Corralation between Kinetics Paradigm and Boston Partners

Assuming the 90 days horizon Kinetics Paradigm Fund is expected to generate 1.79 times more return on investment than Boston Partners. However, Kinetics Paradigm is 1.79 times more volatile than Boston Partners Small. It trades about 0.09 of its potential returns per unit of risk. Boston Partners Small is currently generating about 0.05 per unit of risk. If you would invest  6,186  in Kinetics Paradigm Fund on February 14, 2025 and sell it today you would earn a total of  9,144  from holding Kinetics Paradigm Fund or generate 147.82% 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.  Boston Partners Small

Kinetics Paradigm

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetics Paradigm Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Kinetics Paradigm is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Boston Partners Small

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Kinetics Paradigm and Boston Partners

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

The idea behind Kinetics Paradigm Fund and Boston Partners Small 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.