Correlation Between Horizon Kinetics and Cambria Value

Can any of the company-specific risk be diversified away by investing in both Horizon Kinetics and Cambria Value 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 Cambria Value 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 Cambria Value and, you can compare the effects of market volatilities on Horizon Kinetics and Cambria Value 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 Cambria Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Kinetics and Cambria Value.

Diversification Opportunities for Horizon Kinetics and Cambria Value

0.91

Correlation Coefficient

Horizon Kinetics  Cambria Value

Almost no diversification

The 3 months correlation between Horizon and Cambria is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Inflation and Cambria Value and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Value 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 Cambria Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Value has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and Cambria Value go up and down completely randomly.

Pair Corralation between Horizon Kinetics and Cambria Value

Given the investment horizon of 90 days Horizon Kinetics Inflation is expected to generate 0.93 times more return on investment than Cambria Value. However, Horizon Kinetics Inflation is 1.08 times less risky than Cambria Value. It trades about 0.3 of its potential returns per unit of risk. Cambria Value and is currently generating about 0.19 per unit of risk. If you would invest  3,582  in Horizon Kinetics Inflation on September 5, 2024 and sell it today you would earn a total of  651.00  from holding Horizon Kinetics Inflation or generate 18.17% return on investment over 90 days.

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

Horizon Kinetics Inflation  vs.  Cambria Value and

Horizon Kinetics Inf

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Inflation are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Horizon Kinetics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cambria Value

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cambria Value and are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Cambria Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Horizon Kinetics and Cambria Value

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

The idea behind Horizon Kinetics Inflation and Cambria Value 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.