Correlation Between EA Series and Horizon Kinetics

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

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

Diversification Opportunities for EA Series and Horizon Kinetics

-0.09

Correlation Coefficient

EA Series  Horizon Kinetics

Good diversification

The 3 months correlation between DRLL and Horizon is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding EA Series Trust and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical and EA Series 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 EA Series Trust 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 Medical has no effect on the direction of EA Series i.e., EA Series and Horizon Kinetics go up and down completely randomly.

Pair Corralation between EA Series and Horizon Kinetics

Given the investment horizon of 90 days EA Series Trust is expected to generate 1.52 times more return on investment than Horizon Kinetics. However, EA Series is 1.52 times more volatile than Horizon Kinetics Medical. It trades about 0.11 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about 0.11 per unit of risk. If you would invest  2,687  in EA Series Trust on December 28, 2024 and sell it today you would earn a total of  253.21  from holding EA Series Trust or generate 9.42% return on investment over 90 days.

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

EA Series Trust  vs.  Horizon Kinetics Medical

EA Series Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Horizon Kinetics Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Horizon Kinetics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EA Series and Horizon Kinetics

The main advantage of trading using opposite EA Series and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EA Series 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 EA Series Trust and Horizon Kinetics Medical 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.