Correlation Between Quadratic Interest and Horizon Kinetics

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

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

Diversification Opportunities for Quadratic Interest and Horizon Kinetics

-0.9

Correlation Coefficient

Quadratic Interest  Horizon Kinetics

Pay attention - limited upside

The 3 months correlation between Quadratic and Horizon is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Quadratic Interest Rate and Horizon Kinetics Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Inf and Quadratic Interest 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 Quadratic Interest Rate are associated (or correlated) with Horizon Kinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Kinetics Inf has no effect on the direction of Quadratic Interest i.e., Quadratic Interest and Horizon Kinetics go up and down completely randomly.

Pair Corralation between Quadratic Interest and Horizon Kinetics

Given the investment horizon of 90 days Quadratic Interest Rate is expected to under-perform the Horizon Kinetics. But the etf apears to be less risky and, when comparing its historical volatility, Quadratic Interest Rate is 1.55 times less risky than Horizon Kinetics. The etf trades about -0.19 of its potential returns per unit of risk. The Horizon Kinetics Inflation is currently generating about 0.3 of returns per unit of risk over similar time horizon. 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 Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Quadratic Interest Rate  vs.  Horizon Kinetics Inflation

Quadratic Interest Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadratic Interest Rate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

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.

Pair Trading with Quadratic Interest and Horizon Kinetics

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

The idea behind Quadratic Interest Rate and Horizon Kinetics Inflation 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.