Correlation Between Horizon Kinetics and Invesco SP

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

By analyzing existing cross correlation between Horizon Kinetics Medical and Invesco SP 500, you can compare the effects of market volatilities on Horizon Kinetics and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Kinetics and Invesco SP.

Diversification Opportunities for Horizon Kinetics and Invesco SP

-0.71

Correlation Coefficient

Horizon Kinetics  Invesco SP

Pay attention - limited upside

The 3 months correlation between Horizon and Invesco is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Medical and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Medical are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and Invesco SP go up and down completely randomly.

Pair Corralation between Horizon Kinetics and Invesco SP

Given the investment horizon of 90 days Horizon Kinetics Medical is expected to under-perform the Invesco SP. In addition to that, Horizon Kinetics is 1.01 times more volatile than Invesco SP 500. It trades about -0.18 of its total potential returns per unit of risk. Invesco SP 500 is currently generating about 0.24 per unit of volatility. If you would invest  4,868  in Invesco SP 500 on September 3, 2024 and sell it today you would earn a total of  675.00  from holding Invesco SP 500 or generate 13.87% return on investment over 90 days.

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

Horizon Kinetics Medical  vs.  Invesco SP 500

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 latest unsteady performance, the Etf's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Invesco SP 500

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco SP 500 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Invesco SP exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Horizon Kinetics and Invesco SP

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

The idea behind Horizon Kinetics Medical and Invesco SP 500 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.