Correlation Between Horizon Technology and STRATS SM
Can any of the company-specific risk be diversified away by investing in both Horizon Technology and STRATS SM 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 STRATS SM 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 STRATS SM Trust, you can compare the effects of market volatilities on Horizon Technology and STRATS SM 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 STRATS SM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Technology and STRATS SM.
Diversification Opportunities for Horizon Technology and STRATS SM
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Horizon and STRATS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Technology Finance and STRATS SM Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATS SM Trust 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 STRATS SM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATS SM Trust has no effect on the direction of Horizon Technology i.e., Horizon Technology and STRATS SM go up and down completely randomly.
Pair Corralation between Horizon Technology and STRATS SM
Given the investment horizon of 90 days Horizon Technology is expected to generate 1.39 times less return on investment than STRATS SM. But when comparing it to its historical volatility, Horizon Technology Finance is 1.54 times less risky than STRATS SM. It trades about 0.04 of its potential returns per unit of risk. STRATS SM Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,334 in STRATS SM Trust on September 3, 2024 and sell it today you would earn a total of 165.00 from holding STRATS SM Trust or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.4% |
| Values | Daily Returns |
Horizon Technology Finance vs. STRATS SM Trust
Performance |
| Timeline |
| Horizon Technology |
| STRATS SM Trust |
Horizon Technology and STRATS SM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Technology and STRATS SM
The main advantage of trading using opposite Horizon Technology and STRATS SM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Technology position performs unexpectedly, STRATS SM 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 STRATS SM will offset losses from the drop in STRATS SM's long position.| Horizon Technology vs. Lindblad Expeditions Holdings | Horizon Technology vs. Yuexiu Transport Infrastructure | Horizon Technology vs. Marfrig Global Foods | Horizon Technology vs. Lifevantage |
| STRATS SM vs. Western Asset Global | STRATS SM vs. Invesco Trust For | STRATS SM vs. Logan Ridge Finance | STRATS SM vs. Invesco Advantage MIT |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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