Correlation Between Horizon Kinetics and Dimensional ETF

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

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

Diversification Opportunities for Horizon Kinetics and Dimensional ETF

0.88

Correlation Coefficient

Horizon Kinetics  Dimensional ETF

Very poor diversification

The 3 months correlation between Horizon and Dimensional is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Inflation and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 Inflation are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and Dimensional ETF go up and down completely randomly.

Pair Corralation between Horizon Kinetics and Dimensional ETF

Given the investment horizon of 90 days Horizon Kinetics Inflation is expected to generate 0.67 times more return on investment than Dimensional ETF. However, Horizon Kinetics Inflation is 1.5 times less risky than Dimensional ETF. It trades about 0.3 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.15 per unit of risk. If you would invest  3,582  in Horizon Kinetics Inflation on September 5, 2024 and sell it today you would earn a total of  651.00  from holding Horizon Kinetics Inflation or generate 18.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Horizon Kinetics Inflation  vs.  Dimensional ETF Trust

Horizon Kinetics Inf

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Inflation are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Horizon Kinetics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dimensional ETF Trust

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Dimensional ETF may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Horizon Kinetics and Dimensional ETF

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

The idea behind Horizon Kinetics Inflation and Dimensional ETF Trust 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.