Correlation Between Vanguard Financials and Horizon Kinetics

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

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

Diversification Opportunities for Vanguard Financials and Horizon Kinetics

0.18

Correlation Coefficient

Vanguard Financials  Horizon Kinetics

Average diversification

The 3 months correlation between Vanguard and Horizon is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Financials Index and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical and Vanguard Financials 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 Vanguard Financials Index are associated (or correlated) with Horizon Kinetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Kinetics Medical has no effect on the direction of Vanguard Financials i.e., Vanguard Financials and Horizon Kinetics go up and down completely randomly.

Pair Corralation between Vanguard Financials and Horizon Kinetics

Considering the 90-day investment horizon Vanguard Financials is expected to generate 2.41 times less return on investment than Horizon Kinetics. In addition to that, Vanguard Financials is 1.21 times more volatile than Horizon Kinetics Medical. It trades about 0.02 of its total potential returns per unit of risk. Horizon Kinetics Medical is currently generating about 0.06 per unit of volatility. If you would invest  2,672  in Horizon Kinetics Medical on December 26, 2024 and sell it today you would earn a total of  89.00  from holding Horizon Kinetics Medical or generate 3.33% return on investment over 90 days.

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

Vanguard Financials Index  vs.  Horizon Kinetics Medical

Vanguard Financials Index

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Financials Index are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Vanguard Financials is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Horizon Kinetics Medical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Horizon Kinetics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Financials and Horizon Kinetics

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

The idea behind Vanguard Financials Index and Horizon Kinetics Medical 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.