Correlation Between Horizon Kinetics and UBS ETRACS

Can any of the company-specific risk be diversified away by investing in both Horizon Kinetics and UBS ETRACS 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 UBS ETRACS 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 UBS ETRACS , you can compare the effects of market volatilities on Horizon Kinetics and UBS ETRACS 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 UBS ETRACS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Kinetics and UBS ETRACS.

Diversification Opportunities for Horizon Kinetics and UBS ETRACS

-0.44

Correlation Coefficient

Horizon Kinetics  UBS ETRACS

Very good diversification

The 3 months correlation between Horizon and UBS is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Medical and UBS ETRACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETRACS 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 UBS ETRACS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETRACS has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and UBS ETRACS go up and down completely randomly.

Pair Corralation between Horizon Kinetics and UBS ETRACS

Given the investment horizon of 90 days Horizon Kinetics Medical is expected to under-perform the UBS ETRACS. But the etf apears to be less risky and, when comparing its historical volatility, Horizon Kinetics Medical is 3.89 times less risky than UBS ETRACS. The etf trades about -0.35 of its potential returns per unit of risk. The UBS ETRACS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,813  in UBS ETRACS on October 9, 2024 and sell it today you would earn a total of  185.00  from holding UBS ETRACS or generate 10.2% return on investment over 90 days.

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

Horizon Kinetics Medical  vs.  UBS ETRACS

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.

UBS ETRACS

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETRACS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal forward indicators, UBS ETRACS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Horizon Kinetics and UBS ETRACS

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

The idea behind Horizon Kinetics Medical and UBS ETRACS 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.