Correlation Between IOTA and Horizen

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

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

Diversification Opportunities for IOTA and Horizen

0.93

Correlation Coefficient

IOTA  Horizen

Almost no diversification

The 3 months correlation between IOTA and Horizen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding IOTA and Horizen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizen and IOTA 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 IOTA are associated (or correlated) with Horizen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizen has no effect on the direction of IOTA i.e., IOTA and Horizen go up and down completely randomly.

Pair Corralation between IOTA and Horizen

Assuming the 90 days trading horizon IOTA is expected to generate 0.74 times more return on investment than Horizen. However, IOTA is 1.36 times less risky than Horizen. It trades about -0.09 of its potential returns per unit of risk. Horizen is currently generating about -0.17 per unit of risk. If you would invest  28.00  in IOTA on December 30, 2024 and sell it today you would lose (11.00) from holding IOTA or give up 39.29% of portfolio value over 90 days.

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

IOTA  vs.  Horizen

IOTA

Risk-Adjusted Performance

Very Weak

Over the last 90 days IOTA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for IOTA shareholders.

Horizen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Horizen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Horizen shareholders.

Pair Trading with IOTA and Horizen

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

The idea behind IOTA and Horizen 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.