Correlation Between Horizon Active and Horizon Esg
Can any of the company-specific risk be diversified away by investing in both Horizon Active and Horizon Esg 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 Active and Horizon Esg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Active Asset and Horizon Esg Defensive, you can compare the effects of market volatilities on Horizon Active and Horizon Esg 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 Active with a short position of Horizon Esg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Active and Horizon Esg.
Diversification Opportunities for Horizon Active and Horizon Esg
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HORIZON and Horizon is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Asset and Horizon Esg Defensive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Esg Defensive and Horizon Active 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 Active Asset are associated (or correlated) with Horizon Esg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Esg Defensive has no effect on the direction of Horizon Active i.e., Horizon Active and Horizon Esg go up and down completely randomly.
Pair Corralation between Horizon Active and Horizon Esg
Assuming the 90 days horizon Horizon Active Asset is expected to generate 0.95 times more return on investment than Horizon Esg. However, Horizon Active Asset is 1.05 times less risky than Horizon Esg. It trades about -0.06 of its potential returns per unit of risk. Horizon Esg Defensive is currently generating about -0.09 per unit of risk. If you would invest 1,334 in Horizon Active Asset on December 29, 2024 and sell it today you would lose (54.00) from holding Horizon Active Asset or give up 4.05% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Horizon Active Asset vs. Horizon Esg Defensive
Performance |
Timeline |
Horizon Active Asset |
Horizon Esg Defensive |
Horizon Active and Horizon Esg Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Horizon Active and Horizon Esg
The main advantage of trading using opposite Horizon Active and Horizon Esg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Active position performs unexpectedly, Horizon Esg 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 Esg will offset losses from the drop in Horizon Esg's long position.Horizon Active vs. Federated Hermes Conservative | Horizon Active vs. Delaware Limited Term Diversified | Horizon Active vs. Pgim Conservative Retirement | Horizon Active vs. Voya Solution Conservative |
Horizon Esg vs. American Century High | Horizon Esg vs. Rbc Bluebay Global | Horizon Esg vs. Prudential Short Duration | Horizon Esg vs. Blackrock High Yield |
Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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