Correlation Between Axs Adaptive and Horizon Defensive

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

By analyzing existing cross correlation between Axs Adaptive Plus and Horizon Defensive Equity, you can compare the effects of market volatilities on Axs Adaptive and Horizon Defensive 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 Axs Adaptive with a short position of Horizon Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axs Adaptive and Horizon Defensive.

Diversification Opportunities for Axs Adaptive and Horizon Defensive

0.18

Correlation Coefficient

Axs Adaptive  Horizon Defensive

Average diversification

The 3 months correlation between Axs and Horizon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Axs Adaptive Plus and Horizon Defensive Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Defensive Equity and Axs Adaptive 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 Axs Adaptive Plus are associated (or correlated) with Horizon Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Defensive Equity has no effect on the direction of Axs Adaptive i.e., Axs Adaptive and Horizon Defensive go up and down completely randomly.

Pair Corralation between Axs Adaptive and Horizon Defensive

Assuming the 90 days horizon Axs Adaptive Plus is expected to generate 0.49 times more return on investment than Horizon Defensive. However, Axs Adaptive Plus is 2.05 times less risky than Horizon Defensive. It trades about -0.06 of its potential returns per unit of risk. Horizon Defensive Equity is currently generating about -0.28 per unit of risk. If you would invest  1,154  in Axs Adaptive Plus on September 23, 2024 and sell it today you would lose (13.00) from holding Axs Adaptive Plus or give up 1.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Axs Adaptive Plus  vs.  Horizon Defensive Equity

Axs Adaptive Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axs Adaptive Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Axs Adaptive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Horizon Defensive Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Defensive Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Axs Adaptive and Horizon Defensive

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

The idea behind Axs Adaptive Plus and Horizon Defensive Equity 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.