Correlation Between State Street and Horizon Active
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Premier and Horizon Active Asset, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Horizon Active.
Diversification Opportunities for State Street and Horizon Active
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Horizon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding State Street Premier and Horizon Active Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Active Asset and State Street 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 State Street Premier 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 Asset has no effect on the direction of State Street i.e., State Street and Horizon Active go up and down completely randomly.
Pair Corralation between State Street and Horizon Active
Assuming the 90 days horizon State Street is expected to generate 1.09 times less return on investment than Horizon Active. In addition to that, State Street is 1.53 times more volatile than Horizon Active Asset. It trades about 0.06 of its total potential returns per unit of risk. Horizon Active Asset is currently generating about 0.1 per unit of volatility. If you would invest 1,589 in Horizon Active Asset on August 28, 2024 and sell it today you would earn a total of 26.00 from holding Horizon Active Asset or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Premier vs. Horizon Active Asset
Performance |
| Timeline |
| State Street Premier |
| Horizon Active Asset |
State Street and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Horizon Active
The main advantage of trading using opposite State Street and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Locorr Longshort Modities | State Street vs. Ultra Short Term Fixed | State Street vs. Barings Active Short | State Street vs. Angel Oak Ultrashort |
| Horizon Active vs. Horizon Active Risk | Horizon Active vs. Horizon Active Risk | Horizon Active vs. Horizon Active Dividend | Horizon Active vs. Horizon Active Risk |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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