Correlation Between Horizon Kinetics and KFA Mount
Can any of the company-specific risk be diversified away by investing in both Horizon Kinetics and KFA Mount 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 Kinetics and KFA Mount into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Kinetics Inflation and KFA Mount Lucas, you can compare the effects of market volatilities on Horizon Kinetics and KFA Mount 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 Kinetics with a short position of KFA Mount. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Kinetics and KFA Mount.
Diversification Opportunities for Horizon Kinetics and KFA Mount
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Horizon and KFA is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Inflation and KFA Mount Lucas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KFA Mount Lucas and Horizon Kinetics 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 Kinetics Inflation are associated (or correlated) with KFA Mount. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KFA Mount Lucas has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and KFA Mount go up and down completely randomly.
Pair Corralation between Horizon Kinetics and KFA Mount
Given the investment horizon of 90 days Horizon Kinetics Inflation is expected to generate 1.43 times more return on investment than KFA Mount. However, Horizon Kinetics is 1.43 times more volatile than KFA Mount Lucas. It trades about 0.11 of its potential returns per unit of risk. KFA Mount Lucas is currently generating about -0.03 per unit of risk. If you would invest 3,075 in Horizon Kinetics Inflation on December 5, 2024 and sell it today you would earn a total of 873.00 from holding Horizon Kinetics Inflation or generate 28.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Kinetics Inflation vs. KFA Mount Lucas
Performance |
| Timeline |
| Horizon Kinetics Inf |
| KFA Mount Lucas |
Horizon Kinetics and KFA Mount Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Kinetics and KFA Mount
The main advantage of trading using opposite Horizon Kinetics and KFA Mount positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Kinetics position performs unexpectedly, KFA Mount 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 KFA Mount will offset losses from the drop in KFA Mount's long position.| Horizon Kinetics vs. Quadratic Interest Rate | ||
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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