Correlation Between Horizon Kinetics and ProShares MSCI

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

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

Diversification Opportunities for Horizon Kinetics and ProShares MSCI

0.81

Correlation Coefficient

Horizon Kinetics  ProShares MSCI

Very poor diversification

The 3 months correlation between Horizon and ProShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics SPAC and ProShares MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Europe 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 SPAC are associated (or correlated) with ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Europe has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and ProShares MSCI go up and down completely randomly.

Pair Corralation between Horizon Kinetics and ProShares MSCI

Given the investment horizon of 90 days Horizon Kinetics is expected to generate 3.35 times less return on investment than ProShares MSCI. But when comparing it to its historical volatility, Horizon Kinetics SPAC is 3.07 times less risky than ProShares MSCI. It trades about 0.12 of its potential returns per unit of risk. ProShares MSCI Europe is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,658  in ProShares MSCI Europe on December 30, 2024 and sell it today you would earn a total of  318.00  from holding ProShares MSCI Europe or generate 6.83% return on investment over 90 days.

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

Horizon Kinetics SPAC  vs.  ProShares MSCI Europe

Horizon Kinetics SPAC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics SPAC are ranked lower than 9 (%) 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.

ProShares MSCI Europe

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares MSCI Europe are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, ProShares MSCI may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Horizon Kinetics and ProShares MSCI

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

The idea behind Horizon Kinetics SPAC and ProShares MSCI Europe 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.