Correlation Between Horizon Kinetics and First Trust
Can any of the company-specific risk be diversified away by investing in both Horizon Kinetics and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Kinetics Medical and First Trust Nasdaq, you can compare the effects of market volatilities on Horizon Kinetics and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Kinetics and First Trust.
Diversification Opportunities for Horizon Kinetics and First Trust
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Horizon and First is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Medical and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 Medical are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and First Trust go up and down completely randomly.
Pair Corralation between Horizon Kinetics and First Trust
Given the investment horizon of 90 days Horizon Kinetics Medical is expected to generate 0.8 times more return on investment than First Trust. However, Horizon Kinetics Medical is 1.25 times less risky than First Trust. It trades about 0.18 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about -0.01 per unit of risk. If you would invest 2,644 in Horizon Kinetics Medical on November 4, 2024 and sell it today you would earn a total of 97.00 from holding Horizon Kinetics Medical or generate 3.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Kinetics Medical vs. First Trust Nasdaq
Performance |
| Timeline |
| Horizon Kinetics Medical |
| First Trust Nasdaq |
Horizon Kinetics and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Kinetics and First Trust
The main advantage of trading using opposite Horizon Kinetics and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Kinetics position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Horizon Kinetics vs. Harbor Health Care | Horizon Kinetics vs. Myriad Genetics | Horizon Kinetics vs. Genenta Science SpA |
| First Trust vs. First Trust Consumer | First Trust vs. Fidelity MSCI Consumer | First Trust vs. iShares Consumer Staples | First Trust vs. iShares Global Consumer |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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