Correlation Between Simplify Exchange and Horizon Kinetics

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

By analyzing existing cross correlation between Simplify Exchange Traded and Horizon Kinetics Inflation, you can compare the effects of market volatilities on Simplify Exchange and Horizon Kinetics 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 Simplify Exchange with a short position of Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and Horizon Kinetics.

Diversification Opportunities for Simplify Exchange and Horizon Kinetics

0.83

Correlation Coefficient

Simplify Exchange  Horizon Kinetics

Very poor diversification

The 3 months correlation between Simplify and Horizon is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and Horizon Kinetics Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Inf and Simplify Exchange 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 Simplify Exchange Traded are associated (or correlated) with Horizon Kinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Kinetics Inf has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and Horizon Kinetics go up and down completely randomly.

Pair Corralation between Simplify Exchange and Horizon Kinetics

Considering the 90-day investment horizon Simplify Exchange is expected to generate 3.15 times less return on investment than Horizon Kinetics. But when comparing it to its historical volatility, Simplify Exchange Traded is 1.37 times less risky than Horizon Kinetics. It trades about 0.11 of its potential returns per unit of risk. Horizon Kinetics Inflation is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,980  in Horizon Kinetics Inflation on September 5, 2024 and sell it today you would earn a total of  253.00  from holding Horizon Kinetics Inflation or generate 6.36% return on investment over 90 days.

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

Simplify Exchange Traded  vs.  Horizon Kinetics Inflation

Simplify Exchange Traded

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Simplify Exchange is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Horizon Kinetics Inf

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Inflation are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Horizon Kinetics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simplify Exchange and Horizon Kinetics

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

The idea behind Simplify Exchange Traded and Horizon Kinetics Inflation 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.