Correlation Between First Trust and Horizon Kinetics
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Horizon Kinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Horizon Kinetics Medical, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Horizon Kinetics.
Diversification Opportunities for First Trust and Horizon Kinetics
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Horizon is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded 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 First Trust 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 First Trust Exchange Traded 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 First Trust i.e., First Trust and Horizon Kinetics go up and down completely randomly.
Pair Corralation between First Trust and Horizon Kinetics
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.58 times more return on investment than Horizon Kinetics. However, First Trust Exchange Traded is 1.72 times less risky than Horizon Kinetics. It trades about -0.05 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about -0.29 per unit of risk. If you would invest 2,151 in First Trust Exchange Traded on August 28, 2024 and sell it today you would lose (17.00) from holding First Trust Exchange Traded or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Horizon Kinetics Medical
Performance |
| Timeline |
| First Trust Exchange |
| Horizon Kinetics Medical |
First Trust and Horizon Kinetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Horizon Kinetics
The main advantage of trading using opposite First Trust and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Expanded | First Trust vs. BlackRock Future Health | First Trust vs. SPDR SP Health |
| 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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