Correlation Between Horizon Kinetics and Quadratic Interest

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

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

Diversification Opportunities for Horizon Kinetics and Quadratic Interest

0.44

Correlation Coefficient

Horizon Kinetics  Quadratic Interest

Very weak diversification

The 3 months correlation between Horizon and Quadratic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Inflation and Quadratic Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Interest Rate and Horizon Kinetics 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 Kinetics Inflation are associated (or correlated) with Quadratic Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Interest Rate has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and Quadratic Interest go up and down completely randomly.

Pair Corralation between Horizon Kinetics and Quadratic Interest

Given the investment horizon of 90 days Horizon Kinetics Inflation is expected to generate 2.18 times more return on investment than Quadratic Interest. However, Horizon Kinetics is 2.18 times more volatile than Quadratic Interest Rate. It trades about 0.1 of its potential returns per unit of risk. Quadratic Interest Rate is currently generating about 0.2 per unit of risk. If you would invest  3,786  in Horizon Kinetics Inflation on December 29, 2024 and sell it today you would earn a total of  266.00  from holding Horizon Kinetics Inflation or generate 7.03% return on investment over 90 days.

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

Horizon Kinetics Inflation  vs.  Quadratic Interest Rate

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.

Quadratic Interest Rate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quadratic Interest Rate are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Quadratic Interest may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Horizon Kinetics and Quadratic Interest

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

The idea behind Horizon Kinetics Inflation and Quadratic Interest Rate 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.