Correlation Between Horizon Active and Horizon Funds
Can any of the company-specific risk be diversified away by investing in both Horizon Active and Horizon Funds 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 Active and Horizon Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Active Risk and Horizon Funds , you can compare the effects of market volatilities on Horizon Active and Horizon Funds 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 Active with a short position of Horizon Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Active and Horizon Funds.
Diversification Opportunities for Horizon Active and Horizon Funds
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Horizon and Horizon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Risk and Horizon Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Funds and Horizon Active 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 Active Risk are associated (or correlated) with Horizon Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Funds has no effect on the direction of Horizon Active i.e., Horizon Active and Horizon Funds go up and down completely randomly.
Pair Corralation between Horizon Active and Horizon Funds
Assuming the 90 days horizon Horizon Active is expected to generate 1.48 times less return on investment than Horizon Funds. In addition to that, Horizon Active is 3.08 times more volatile than Horizon Funds . It trades about 0.04 of its total potential returns per unit of risk. Horizon Funds is currently generating about 0.19 per unit of volatility. If you would invest 4,835 in Horizon Funds on August 27, 2024 and sell it today you would earn a total of 43.00 from holding Horizon Funds or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Active Risk vs. Horizon Funds
Performance |
| Timeline |
| Horizon Active Risk |
| Horizon Funds |
Horizon Active and Horizon Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Active and Horizon Funds
The main advantage of trading using opposite Horizon Active and Horizon Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Active position performs unexpectedly, Horizon Funds 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 Horizon Funds will offset losses from the drop in Horizon Funds' long position.| Horizon Active vs. Horizon Active Asset | Horizon Active vs. Horizon Active Dividend | Horizon Active vs. Horizon Defined Risk | Horizon Active vs. Horizon Defensive Equity |
| Horizon Funds vs. Horizon Active Risk | Horizon Funds vs. Horizon Active Risk | Horizon Funds vs. Horizon Active Asset | Horizon Funds vs. Horizon Active Dividend |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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