Correlation Between Horizon Us and Horizon Active
Can any of the company-specific risk be diversified away by investing in both Horizon Us 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 Horizon Us and Horizon Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Defensive Equity and Horizon Active Asset, you can compare the effects of market volatilities on Horizon Us 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 Horizon Us with a short position of Horizon Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Us and Horizon Active.
Diversification Opportunities for Horizon Us and Horizon Active
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Horizon and Horizon is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Defensive Equity 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 Horizon Us 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 Horizon Defensive Equity 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 Horizon Us i.e., Horizon Us and Horizon Active go up and down completely randomly.
Pair Corralation between Horizon Us and Horizon Active
Assuming the 90 days horizon Horizon Defensive Equity is expected to generate 0.87 times more return on investment than Horizon Active. However, Horizon Defensive Equity is 1.15 times less risky than Horizon Active. It trades about 0.18 of its potential returns per unit of risk. Horizon Active Asset is currently generating about 0.1 per unit of risk. If you would invest 3,321 in Horizon Defensive Equity on August 27, 2024 and sell it today you would earn a total of 86.00 from holding Horizon Defensive Equity or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Defensive Equity vs. Horizon Active Asset
Performance |
| Timeline |
| Horizon Defensive Equity |
| Horizon Active Asset |
Horizon Us and Horizon Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Us and Horizon Active
The main advantage of trading using opposite Horizon Us and Horizon Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Us 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.| Horizon Us vs. Horizon Active Risk | Horizon Us vs. Horizon Active Risk | Horizon Us vs. Horizon Active Asset | Horizon Us vs. Horizon Active Dividend |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |