Correlation Between Health Biotchnology and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Health Biotchnology 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 Health Biotchnology and Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Biotchnology Portfolio and Horizon Active Income, you can compare the effects of market volatilities on Health Biotchnology 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 Health Biotchnology with a short position of Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Biotchnology and Horizon Active.
Diversification Opportunities for Health Biotchnology and Horizon Active
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Health and Horizon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Health Biotchnology Portfolio 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 Health Biotchnology 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 Health Biotchnology Portfolio 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 Health Biotchnology i.e., Health Biotchnology and Horizon Active go up and down completely randomly.
Pair Corralation between Health Biotchnology and Horizon Active
Assuming the 90 days horizon Health Biotchnology Portfolio is expected to under-perform the Horizon Active. In addition to that, Health Biotchnology is 3.01 times more volatile than Horizon Active Income. It trades about -0.11 of its total potential returns per unit of risk. Horizon Active Income is currently generating about -0.04 per unit of volatility. If you would invest 832.00 in Horizon Active Income on September 12, 2024 and sell it today you would lose (5.00) from holding Horizon Active Income or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Health Biotchnology Portfolio vs. Horizon Active Income
Performance |
| Timeline |
| Health Biotchnology |
| Horizon Active Income |
Health Biotchnology and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Biotchnology and Horizon Active
The main advantage of trading using opposite Health Biotchnology and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Biotchnology 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.| Health Biotchnology vs. Alpine Ultra Short | Health Biotchnology vs. Aqr Long Short Equity | Health Biotchnology vs. Boston Partners Longshort | Health Biotchnology vs. Quantitative Longshort Equity |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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