Correlation Between Horizon Securities and Concord Securities
Can any of the company-specific risk be diversified away by investing in both Horizon Securities and Concord Securities 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 Horizon Securities and Concord Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Securities Co and Concord Securities Co, you can compare the effects of market volatilities on Horizon Securities and Concord Securities 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 Horizon Securities with a short position of Concord Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Securities and Concord Securities.
Diversification Opportunities for Horizon Securities and Concord Securities
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Horizon and Concord is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Securities Co and Concord Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Securities and Horizon Securities 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 Horizon Securities Co are associated (or correlated) with Concord Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Securities has no effect on the direction of Horizon Securities i.e., Horizon Securities and Concord Securities go up and down completely randomly.
Pair Corralation between Horizon Securities and Concord Securities
Assuming the 90 days trading horizon Horizon Securities is expected to generate 3.37 times less return on investment than Concord Securities. In addition to that, Horizon Securities is 1.26 times more volatile than Concord Securities Co. It trades about 0.08 of its total potential returns per unit of risk. Concord Securities Co is currently generating about 0.32 per unit of volatility. If you would invest 1,345 in Concord Securities Co on November 5, 2024 and sell it today you would earn a total of 70.00 from holding Concord Securities Co or generate 5.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Securities Co vs. Concord Securities Co
Performance |
| Timeline |
| Horizon Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Concord Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Horizon Securities and Concord Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Securities and Concord Securities
The main advantage of trading using opposite Horizon Securities and Concord Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Securities position performs unexpectedly, Concord Securities 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 Concord Securities will offset losses from the drop in Concord Securities' long position.The idea behind Horizon Securities Co and Concord Securities Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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