Correlation Between IShares Global and Horizon Kinetics

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

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

Diversification Opportunities for IShares Global and Horizon Kinetics

0.9

Correlation Coefficient

IShares Global  Horizon Kinetics

Almost no diversification

The 3 months correlation between IShares and Horizon is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Healthcare and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical and IShares Global 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 iShares Global Healthcare 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 Medical has no effect on the direction of IShares Global i.e., IShares Global and Horizon Kinetics go up and down completely randomly.

Pair Corralation between IShares Global and Horizon Kinetics

Considering the 90-day investment horizon iShares Global Healthcare is expected to generate 0.72 times more return on investment than Horizon Kinetics. However, iShares Global Healthcare is 1.39 times less risky than Horizon Kinetics. It trades about -0.23 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about -0.21 per unit of risk. If you would invest  9,672  in iShares Global Healthcare on October 9, 2024 and sell it today you would lose (912.00) from holding iShares Global Healthcare or give up 9.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

iShares Global Healthcare  vs.  Horizon Kinetics Medical

iShares Global Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Global Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Etf's basic indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the ETF firm stakeholders.

Horizon Kinetics Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Kinetics Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with IShares Global and Horizon Kinetics

The main advantage of trading using opposite IShares Global and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Global 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 iShares Global Healthcare and Horizon Kinetics Medical 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.