Correlation Between Horizon Technology and Main Street
Can any of the company-specific risk be diversified away by investing in both Horizon Technology and Main Street 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 Technology and Main Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Technology Finance and Main Street Capital, you can compare the effects of market volatilities on Horizon Technology and Main Street 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 Technology with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Technology and Main Street.
Diversification Opportunities for Horizon Technology and Main Street
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Horizon and Main is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Technology Finance and Main Street Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Capital and Horizon Technology 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 Technology Finance are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Capital has no effect on the direction of Horizon Technology i.e., Horizon Technology and Main Street go up and down completely randomly.
Pair Corralation between Horizon Technology and Main Street
Given the investment horizon of 90 days Horizon Technology is expected to generate 1.43 times less return on investment than Main Street. But when comparing it to its historical volatility, Horizon Technology Finance is 1.32 times less risky than Main Street. It trades about 0.4 of its potential returns per unit of risk. Main Street Capital is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 5,537 in Main Street Capital on October 20, 2024 and sell it today you would earn a total of 467.00 from holding Main Street Capital or generate 8.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Technology Finance vs. Main Street Capital
Performance |
| Timeline |
| Horizon Technology |
| Main Street Capital |
Horizon Technology and Main Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Technology and Main Street
The main advantage of trading using opposite Horizon Technology and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Technology position performs unexpectedly, Main Street 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 Main Street will offset losses from the drop in Main Street's long position.| Horizon Technology vs. Gladstone Capital | Horizon Technology vs. Gladstone Investment | Horizon Technology vs. Prospect Capital | Horizon Technology vs. Stellus Capital Investment |
| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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