Correlation Between Horizon Kinetics and IShares MSCI

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

Diversification Opportunities for Horizon Kinetics and IShares MSCI

-0.16

Correlation Coefficient

Horizon Kinetics  IShares MSCI

Good diversification

The 3 months correlation between Horizon and IShares is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics SPAC and iShares MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI China 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI China has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and IShares MSCI go up and down completely randomly.

Pair Corralation between Horizon Kinetics and IShares MSCI

Given the investment horizon of 90 days Horizon Kinetics is expected to generate 1.17 times less return on investment than IShares MSCI. But when comparing it to its historical volatility, Horizon Kinetics SPAC is 3.33 times less risky than IShares MSCI. It trades about 0.04 of its potential returns per unit of risk. iShares MSCI China is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,487  in iShares MSCI China on September 20, 2024 and sell it today you would earn a total of  185.00  from holding iShares MSCI China or generate 4.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.97%
Values	Daily Returns

Horizon Kinetics SPAC  vs.  iShares MSCI China

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.

iShares MSCI China

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI China are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, IShares MSCI demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Horizon Kinetics and IShares MSCI

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

The idea behind Horizon Kinetics SPAC and iShares MSCI China 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..