Correlation Between Horizon Technology and RENN Fund
Can any of the company-specific risk be diversified away by investing in both Horizon Technology and RENN Fund 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 RENN Fund 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 RENN Fund, you can compare the effects of market volatilities on Horizon Technology and RENN Fund 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 RENN Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Technology and RENN Fund.
Diversification Opportunities for Horizon Technology and RENN Fund
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Horizon and RENN is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Technology Finance and RENN Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENN Fund 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 RENN Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENN Fund has no effect on the direction of Horizon Technology i.e., Horizon Technology and RENN Fund go up and down completely randomly.
Pair Corralation between Horizon Technology and RENN Fund
Given the investment horizon of 90 days Horizon Technology is expected to generate 2.85 times less return on investment than RENN Fund. But when comparing it to its historical volatility, Horizon Technology Finance is 2.09 times less risky than RENN Fund. It trades about 0.05 of its potential returns per unit of risk. RENN Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 262.00 in RENN Fund on November 4, 2024 and sell it today you would earn a total of 16.00 from holding RENN Fund or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Technology Finance vs. RENN Fund
Performance |
| Timeline |
| Horizon Technology |
| RENN Fund |
Horizon Technology and RENN Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Technology and RENN Fund
The main advantage of trading using opposite Horizon Technology and RENN Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Technology position performs unexpectedly, RENN Fund 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 RENN Fund will offset losses from the drop in RENN Fund's long position.| Horizon Technology vs. Gladstone Capital | Horizon Technology vs. Gladstone Investment | Horizon Technology vs. Prospect Capital | Horizon Technology vs. Stellus Capital Investment |
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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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