Correlation Between Horizon Space and FactSet Research

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

By analyzing existing cross correlation between Horizon Space Acquisition and FactSet Research Systems, you can compare the effects of market volatilities on Horizon Space and FactSet Research 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 Space with a short position of FactSet Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Space and FactSet Research.

Diversification Opportunities for Horizon Space and FactSet Research

0.16

Correlation Coefficient

Horizon Space  FactSet Research

Average diversification

The 3 months correlation between Horizon and FactSet is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Space Acquisition and FactSet Research Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FactSet Research Systems and Horizon Space 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 Space Acquisition are associated (or correlated) with FactSet Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FactSet Research Systems has no effect on the direction of Horizon Space i.e., Horizon Space and FactSet Research go up and down completely randomly.

Pair Corralation between Horizon Space and FactSet Research

Assuming the 90 days horizon Horizon Space Acquisition is expected to generate 29.16 times more return on investment than FactSet Research. However, Horizon Space is 29.16 times more volatile than FactSet Research Systems. It trades about 0.17 of its potential returns per unit of risk. FactSet Research Systems is currently generating about -0.1 per unit of risk. If you would invest  1.50  in Horizon Space Acquisition on December 29, 2024 and sell it today you would earn a total of  0.30  from holding Horizon Space Acquisition or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	49.18%
Values	Daily Returns

Horizon Space Acquisition  vs.  FactSet Research Systems

Horizon Space Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Space Acquisition are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Horizon Space showed solid returns over the last few months and may actually be approaching a breakup point.

FactSet Research Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days FactSet Research Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Horizon Space and FactSet Research

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

The idea behind Horizon Space Acquisition and FactSet Research Systems 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.