Correlation Between Horizon Kinetics and Freedom Day

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

Diversification Opportunities for Horizon Kinetics and Freedom Day

0.14

Correlation Coefficient

Horizon Kinetics  Freedom Day

Average diversification

The 3 months correlation between Horizon and Freedom is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics SPAC and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and Freedom Day go up and down completely randomly.

Pair Corralation between Horizon Kinetics and Freedom Day

Given the investment horizon of 90 days Horizon Kinetics SPAC is expected to generate 0.13 times more return on investment than Freedom Day. However, Horizon Kinetics SPAC is 7.48 times less risky than Freedom Day. It trades about 0.22 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about -0.18 per unit of risk. If you would invest  10,041  in Horizon Kinetics SPAC on September 20, 2024 and sell it today you would earn a total of  60.00  from holding Horizon Kinetics SPAC or generate 0.6% return on investment over 90 days.

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

Horizon Kinetics SPAC  vs.  Freedom Day Dividend

Horizon Kinetics SPAC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics SPAC are ranked lower than 3 (%) 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.

Freedom Day Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Day Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Horizon Kinetics and Freedom Day

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

The idea behind Horizon Kinetics SPAC and Freedom Day Dividend 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.