Correlation Between Freedom 100 and Horizon Kinetics

Can any of the company-specific risk be diversified away by investing in both Freedom 100 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 Freedom 100 and Horizon Kinetics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Freedom 100 Emerging and Horizon Kinetics Inflation, you can compare the effects of market volatilities on Freedom 100 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 Freedom 100 with a short position of Horizon Kinetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom 100 and Horizon Kinetics.

Diversification Opportunities for Freedom 100 and Horizon Kinetics

0.82

Correlation Coefficient

Freedom 100  Horizon Kinetics

Very poor diversification

The 3 months correlation between Freedom and Horizon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Freedom 100 Emerging 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 Freedom 100 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 Freedom 100 Emerging 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 Freedom 100 i.e., Freedom 100 and Horizon Kinetics go up and down completely randomly.

Pair Corralation between Freedom 100 and Horizon Kinetics

Given the investment horizon of 90 days Freedom 100 Emerging is expected to generate 1.05 times more return on investment than Horizon Kinetics. However, Freedom 100 is 1.05 times more volatile than Horizon Kinetics Inflation. It trades about 0.11 of its potential returns per unit of risk. Horizon Kinetics Inflation is currently generating about 0.11 per unit of risk. If you would invest  3,328  in Freedom 100 Emerging on December 26, 2024 and sell it today you would earn a total of  268.00  from holding Freedom 100 Emerging or generate 8.05% return on investment over 90 days.

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

Freedom 100 Emerging  vs.  Horizon Kinetics Inflation

Freedom 100 Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom 100 Emerging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Freedom 100 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Horizon Kinetics Inf

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Inflation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Horizon Kinetics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Freedom 100 and Horizon Kinetics

The main advantage of trading using opposite Freedom 100 and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom 100 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 Freedom 100 Emerging 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.