Correlation Between Metropolitan West and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Horizon Active 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 Metropolitan West and Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and Horizon Active Income, you can compare the effects of market volatilities on Metropolitan West and Horizon Active 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 Metropolitan West with a short position of Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Horizon Active.
Diversification Opportunities for Metropolitan West and Horizon Active
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Metropolitan and Horizon is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and Horizon Active Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Income and Metropolitan West 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 Metropolitan West Total are associated (or correlated) with Horizon Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Active Income has no effect on the direction of Metropolitan West i.e., Metropolitan West and Horizon Active go up and down completely randomly.
Pair Corralation between Metropolitan West and Horizon Active
Assuming the 90 days horizon Metropolitan West is expected to generate 1.1 times less return on investment than Horizon Active. In addition to that, Metropolitan West is 1.21 times more volatile than Horizon Active Income. It trades about 0.04 of its total potential returns per unit of risk. Horizon Active Income is currently generating about 0.05 per unit of volatility. If you would invest 776.00 in Horizon Active Income on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Horizon Active Income or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Metropolitan West Total vs. Horizon Active Income
Performance |
| Timeline |
| Metropolitan West Total |
| Horizon Active Income |
Metropolitan West and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Horizon Active
The main advantage of trading using opposite Metropolitan West and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Horizon Active 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 Active will offset losses from the drop in Horizon Active's long position.| Metropolitan West vs. Investec Emerging Markets | Metropolitan West vs. Mid Cap 15x Strategy | Metropolitan West vs. Doubleline Emerging Markets | Metropolitan West vs. Shelton Emerging Markets |
| Horizon Active vs. T Rowe Price | Horizon Active vs. L Abbett Fundamental | Horizon Active vs. Ab Value Fund | Horizon Active vs. Qs Growth Fund |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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