Correlation Between F/m Investments and Horizon Spin-off

Can any of the company-specific risk be diversified away by investing in both F/m Investments and Horizon Spin-off 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 F/m Investments and Horizon Spin-off into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fm Investments Large and Horizon Spin Off And, you can compare the effects of market volatilities on F/m Investments and Horizon Spin-off 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 F/m Investments with a short position of Horizon Spin-off. Check out your portfolio center. Please also check ongoing floating volatility patterns of F/m Investments and Horizon Spin-off.

Diversification Opportunities for F/m Investments and Horizon Spin-off

-0.41

Correlation Coefficient

F/m Investments  Horizon Spin-off

Very good diversification

The 3 months correlation between F/m and Horizon is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Horizon Spin Off And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Spin Off and F/m Investments 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 Fm Investments Large are associated (or correlated) with Horizon Spin-off. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Spin Off has no effect on the direction of F/m Investments i.e., F/m Investments and Horizon Spin-off go up and down completely randomly.

Pair Corralation between F/m Investments and Horizon Spin-off

Assuming the 90 days horizon F/m Investments is expected to generate 1.76 times less return on investment than Horizon Spin-off. But when comparing it to its historical volatility, Fm Investments Large is 1.62 times less risky than Horizon Spin-off. It trades about 0.07 of its potential returns per unit of risk. Horizon Spin Off And is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,788  in Horizon Spin Off And on December 4, 2024 and sell it today you would earn a total of  1,565  from holding Horizon Spin Off And or generate 87.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Fm Investments Large  vs.  Horizon Spin Off And

Fm Investments Large

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fm Investments Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Horizon Spin Off

Risk-Adjusted Performance

Very Weak

Over the last 90 days Horizon Spin Off And has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with F/m Investments and Horizon Spin-off

The main advantage of trading using opposite F/m Investments and Horizon Spin-off positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if F/m Investments position performs unexpectedly, Horizon Spin-off 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 Spin-off will offset losses from the drop in Horizon Spin-off's long position.

The idea behind Fm Investments Large and Horizon Spin Off And 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.