Correlation Between Horizon Kinetics and Investment Managers

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

Diversification Opportunities for Horizon Kinetics and Investment Managers

0.71

Correlation Coefficient

Horizon Kinetics  Investment Managers

Poor diversification

The 3 months correlation between Horizon and Investment is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Kinetics Inflation and Investment Managers Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Managers 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 Investment Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Managers has no effect on the direction of Horizon Kinetics i.e., Horizon Kinetics and Investment Managers go up and down completely randomly.

Pair Corralation between Horizon Kinetics and Investment Managers

Given the investment horizon of 90 days Horizon Kinetics Inflation is expected to generate 1.25 times more return on investment than Investment Managers. However, Horizon Kinetics is 1.25 times more volatile than Investment Managers Series. It trades about 0.32 of its potential returns per unit of risk. Investment Managers Series is currently generating about 0.13 per unit of risk. If you would invest  3,583  in Horizon Kinetics Inflation on September 2, 2024 and sell it today you would earn a total of  683.00  from holding Horizon Kinetics Inflation or generate 19.06% return on investment over 90 days.

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

Horizon Kinetics Inflation  vs.  Investment Managers Series

Horizon Kinetics Inf

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics Inflation are ranked lower than 25 (%) 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.

Investment Managers

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investment Managers Series are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Investment Managers is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Horizon Kinetics and Investment Managers

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

The idea behind Horizon Kinetics Inflation and Investment Managers Series 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 Global Correlations module to find global opportunities by holding instruments from different markets.