Correlation Between VictoryShares THB and Horizon Kinetics

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

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

Diversification Opportunities for VictoryShares THB and Horizon Kinetics

-0.1

Correlation Coefficient

VictoryShares THB  Horizon Kinetics

Good diversification

The 3 months correlation between VictoryShares and Horizon is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares THB Mid and Horizon Kinetics SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics SPAC and VictoryShares THB 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 VictoryShares THB Mid 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 SPAC has no effect on the direction of VictoryShares THB i.e., VictoryShares THB and Horizon Kinetics go up and down completely randomly.

Pair Corralation between VictoryShares THB and Horizon Kinetics

Given the investment horizon of 90 days VictoryShares THB Mid is expected to under-perform the Horizon Kinetics. In addition to that, VictoryShares THB is 5.37 times more volatile than Horizon Kinetics SPAC. It trades about -0.15 of its total potential returns per unit of risk. Horizon Kinetics SPAC is currently generating about 0.03 per unit of volatility. If you would invest  9,801  in Horizon Kinetics SPAC on October 6, 2024 and sell it today you would earn a total of  23.00  from holding Horizon Kinetics SPAC or generate 0.23% return on investment over 90 days.

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

VictoryShares THB Mid  vs.  Horizon Kinetics SPAC

VictoryShares THB Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VictoryShares THB Mid has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, VictoryShares THB is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Horizon Kinetics SPAC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics SPAC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Horizon Kinetics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with VictoryShares THB and Horizon Kinetics

The main advantage of trading using opposite VictoryShares THB and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares THB 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 VictoryShares THB Mid and Horizon Kinetics SPAC 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.