Correlation Between Horizon Active and Horizon Us
Can any of the company-specific risk be diversified away by investing in both Horizon Active and Horizon Us 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 Us 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 Defensive Equity, you can compare the effects of market volatilities on Horizon Active and Horizon Us 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 Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Active and Horizon Us.
Diversification Opportunities for Horizon Active and Horizon Us
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Horizon and Horizon is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Risk and Horizon Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defensive Equity 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 Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defensive Equity has no effect on the direction of Horizon Active i.e., Horizon Active and Horizon Us go up and down completely randomly.
Pair Corralation between Horizon Active and Horizon Us
Assuming the 90 days horizon Horizon Active is expected to generate 2.75 times less return on investment than Horizon Us. But when comparing it to its historical volatility, Horizon Active Risk is 1.03 times less risky than Horizon Us. It trades about 0.09 of its potential returns per unit of risk. Horizon Defensive Equity is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 3,311 in Horizon Defensive Equity on August 31, 2024 and sell it today you would earn a total of 119.00 from holding Horizon Defensive Equity or generate 3.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Active Risk vs. Horizon Defensive Equity
Performance |
| Timeline |
| Horizon Active Risk |
| Horizon Defensive Equity |
Horizon Active and Horizon Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Active and Horizon Us
The main advantage of trading using opposite Horizon Active and Horizon Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Active position performs unexpectedly, Horizon Us 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 Us will offset losses from the drop in Horizon Us' long position.| Horizon Active vs. Ab Bond Inflation | Horizon Active vs. Aqr Managed Futures | Horizon Active vs. Blackrock Inflation Protected | Horizon Active vs. Fidelity Advisor 529 |
| Horizon Us vs. The Gabelli Equity | Horizon Us vs. Ultra Short Fixed Income | Horizon Us vs. Small Cap Equity | Horizon Us vs. Ab Select Equity |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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