Correlation Between T Rex and Horizon Kinetics
Can any of the company-specific risk be diversified away by investing in both T Rex 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 T Rex and Horizon Kinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rex 2X Long and Horizon Kinetics Inflation, you can compare the effects of market volatilities on T Rex 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 T Rex with a short position of Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and Horizon Kinetics.
Diversification Opportunities for T Rex and Horizon Kinetics
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NVDX and Horizon is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and Horizon Kinetics Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Inf and T Rex 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 T Rex 2X Long 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 Inf has no effect on the direction of T Rex i.e., T Rex and Horizon Kinetics go up and down completely randomly.
Pair Corralation between T Rex and Horizon Kinetics
Given the investment horizon of 90 days T Rex 2X Long is expected to generate 7.17 times more return on investment than Horizon Kinetics. However, T Rex is 7.17 times more volatile than Horizon Kinetics Inflation. It trades about 0.05 of its potential returns per unit of risk. Horizon Kinetics Inflation is currently generating about 0.22 per unit of risk. If you would invest 1,509 in T Rex 2X Long on September 1, 2024 and sell it today you would earn a total of 233.00 from holding T Rex 2X Long or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rex 2X Long vs. Horizon Kinetics Inflation
Performance |
| Timeline |
| T Rex 2X |
| Horizon Kinetics Inf |
T Rex and Horizon Kinetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rex and Horizon Kinetics
The main advantage of trading using opposite T Rex and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex 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.| T Rex vs. Tidal Trust II | T Rex vs. Tidal Trust II | T Rex vs. Direxion Daily META | T Rex vs. Direxion Daily META |
| Horizon Kinetics vs. Quadratic Interest Rate | Horizon Kinetics vs. Simplify Interest Rate | Horizon Kinetics vs. iShares Small Cap | Horizon Kinetics vs. Freedom 100 Emerging |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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