Correlation Between Horizon Spin and Jacob Micro

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

By analyzing existing cross correlation between Horizon Spin Off And and Jacob Micro Cap, you can compare the effects of market volatilities on Horizon Spin and Jacob Micro 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 Spin with a short position of Jacob Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Spin and Jacob Micro.

Diversification Opportunities for Horizon Spin and Jacob Micro

0.8

Correlation Coefficient

Horizon Spin  Jacob Micro

Very poor diversification

The 3 months correlation between Horizon and Jacob is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Spin Off And and Jacob Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Micro Cap and Horizon Spin 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 Spin Off And are associated (or correlated) with Jacob Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Micro Cap has no effect on the direction of Horizon Spin i.e., Horizon Spin and Jacob Micro go up and down completely randomly.

Pair Corralation between Horizon Spin and Jacob Micro

Assuming the 90 days horizon Horizon Spin Off And is expected to generate 2.26 times more return on investment than Jacob Micro. However, Horizon Spin is 2.26 times more volatile than Jacob Micro Cap. It trades about 0.17 of its potential returns per unit of risk. Jacob Micro Cap is currently generating about 0.16 per unit of risk. If you would invest  2,442  in Horizon Spin Off And on September 16, 2024 and sell it today you would earn a total of  794.00  from holding Horizon Spin Off And or generate 32.51% return on investment over 90 days.

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

Horizon Spin Off And  vs.  Jacob Micro Cap

Horizon Spin Off

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Spin Off And are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Horizon Spin showed solid returns over the last few months and may actually be approaching a breakup point.

Jacob Micro Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jacob Micro Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Jacob Micro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Horizon Spin and Jacob Micro

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

The idea behind Horizon Spin Off And and Jacob Micro Cap 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 Transaction History module to view history of all your transactions and understand their impact on performance.