Correlation Between IShares Healthcare and Horizon Kinetics
Can any of the company-specific risk be diversified away by investing in both IShares Healthcare and Horizon Kinetics 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 IShares Healthcare and Horizon Kinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Healthcare ETF and Horizon Kinetics Medical, you can compare the effects of market volatilities on IShares Healthcare and Horizon Kinetics 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 IShares Healthcare with a short position of Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Healthcare and Horizon Kinetics.
Diversification Opportunities for IShares Healthcare and Horizon Kinetics
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Horizon is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Healthcare ETF and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical and IShares Healthcare 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 iShares Healthcare ETF are associated (or correlated) with Horizon Kinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Kinetics Medical has no effect on the direction of IShares Healthcare i.e., IShares Healthcare and Horizon Kinetics go up and down completely randomly.
Pair Corralation between IShares Healthcare and Horizon Kinetics
Considering the 90-day investment horizon iShares Healthcare ETF is expected to generate 0.8 times more return on investment than Horizon Kinetics. However, iShares Healthcare ETF is 1.25 times less risky than Horizon Kinetics. It trades about 0.03 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about -0.01 per unit of risk. If you would invest 5,679 in iShares Healthcare ETF on August 29, 2024 and sell it today you would earn a total of 489.00 from holding iShares Healthcare ETF or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 92.93% |
| Values | Daily Returns |
iShares Healthcare ETF vs. Horizon Kinetics Medical
Performance |
| Timeline |
| iShares Healthcare ETF |
| Horizon Kinetics Medical |
IShares Healthcare and Horizon Kinetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Healthcare and Horizon Kinetics
The main advantage of trading using opposite IShares Healthcare and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Healthcare position performs unexpectedly, Horizon Kinetics 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 Kinetics will offset losses from the drop in Horizon Kinetics' long position.| IShares Healthcare vs. iShares Financials ETF | IShares Healthcare vs. iShares Consumer Discretionary | IShares Healthcare vs. iShares Industrials ETF | IShares Healthcare vs. iShares Consumer Staples |
| Horizon Kinetics vs. Global X Clean | Horizon Kinetics vs. Global X Renewable | Horizon Kinetics vs. Global X Thematic | Horizon Kinetics vs. Global X AgTech |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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