Correlation Between FlexShares Real and Horizon Kinetics

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

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

Diversification Opportunities for FlexShares Real and Horizon Kinetics

0.01

Correlation Coefficient

FlexShares Real  Horizon Kinetics

Significant diversification

The 3 months correlation between FlexShares and Horizon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Real Assets and Horizon Kinetics Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Inf and FlexShares Real 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 FlexShares Real Assets 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 Inf has no effect on the direction of FlexShares Real i.e., FlexShares Real and Horizon Kinetics go up and down completely randomly.

Pair Corralation between FlexShares Real and Horizon Kinetics

Given the investment horizon of 90 days FlexShares Real Assets is expected to under-perform the Horizon Kinetics. But the etf apears to be less risky and, when comparing its historical volatility, FlexShares Real Assets is 1.6 times less risky than Horizon Kinetics. The etf trades about -0.17 of its potential returns per unit of risk. The Horizon Kinetics Inflation is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,786  in Horizon Kinetics Inflation on September 23, 2024 and sell it today you would lose (7.00) from holding Horizon Kinetics Inflation or give up 0.18% of portfolio value over 90 days.

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

FlexShares Real Assets  vs.  Horizon Kinetics Inflation

FlexShares Real Assets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Real Assets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Horizon Kinetics Inf

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Kinetics Inflation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Horizon Kinetics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with FlexShares Real and Horizon Kinetics

The main advantage of trading using opposite FlexShares Real and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FlexShares Real 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 FlexShares Real Assets and Horizon Kinetics Inflation 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.