Correlation Between Horizon Securities and IBF Financial

Can any of the company-specific risk be diversified away by investing in both Horizon Securities and IBF Financial 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 Securities and IBF Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Horizon Securities Co and IBF Financial Holdings, you can compare the effects of market volatilities on Horizon Securities and IBF Financial 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 Securities with a short position of IBF Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Securities and IBF Financial.

Diversification Opportunities for Horizon Securities and IBF Financial

-0.52

Correlation Coefficient

Horizon Securities  IBF Financial

Excellent diversification

The 3 months correlation between Horizon and IBF is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Securities Co and IBF Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBF Financial Holdings and Horizon Securities 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 Securities Co are associated (or correlated) with IBF Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBF Financial Holdings has no effect on the direction of Horizon Securities i.e., Horizon Securities and IBF Financial go up and down completely randomly.

Pair Corralation between Horizon Securities and IBF Financial

Assuming the 90 days trading horizon Horizon Securities is expected to generate 5.39 times less return on investment than IBF Financial. In addition to that, Horizon Securities is 1.26 times more volatile than IBF Financial Holdings. It trades about 0.01 of its total potential returns per unit of risk. IBF Financial Holdings is currently generating about 0.08 per unit of volatility. If you would invest  1,160  in IBF Financial Holdings on September 28, 2024 and sell it today you would earn a total of  350.00  from holding IBF Financial Holdings or generate 30.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Horizon Securities Co  vs.  IBF Financial Holdings

Horizon Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

IBF Financial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IBF Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IBF Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Horizon Securities and IBF Financial

The main advantage of trading using opposite Horizon Securities and IBF Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Securities position performs unexpectedly, IBF Financial 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 IBF Financial will offset losses from the drop in IBF Financial's long position.

The idea behind Horizon Securities Co and IBF Financial Holdings 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.

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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.