Correlation Between SYS and Horizen
Can any of the company-specific risk be diversified away by investing in both SYS and Horizen 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 SYS and Horizen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYS and Horizen, you can compare the effects of market volatilities on SYS and Horizen 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 SYS with a short position of Horizen. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYS and Horizen.
Diversification Opportunities for SYS and Horizen
Very poor diversification
The 3 months correlation between SYS and Horizen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding SYS and Horizen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizen and SYS 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 SYS are associated (or correlated) with Horizen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizen has no effect on the direction of SYS i.e., SYS and Horizen go up and down completely randomly.
Pair Corralation between SYS and Horizen
Assuming the 90 days trading horizon SYS is expected to generate 2.13 times less return on investment than Horizen. But when comparing it to its historical volatility, SYS is 1.58 times less risky than Horizen. It trades about 0.28 of its potential returns per unit of risk. Horizen is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 731.00 in Horizen on September 1, 2024 and sell it today you would earn a total of 794.00 from holding Horizen or generate 108.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYS vs. Horizen
Performance |
| Timeline |
| SYS |
| Horizen |
SYS and Horizen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYS and Horizen
The main advantage of trading using opposite SYS and Horizen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYS position performs unexpectedly, Horizen 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 Horizen will offset losses from the drop in Horizen's long position.The idea behind SYS and Horizen pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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