Correlation Between Horizon Spin and First Trust

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

By analyzing existing cross correlation between Horizon Spin Off And and First Trust Energy, you can compare the effects of market volatilities on Horizon Spin and First Trust 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 Spin with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Spin and First Trust.

Diversification Opportunities for Horizon Spin and First Trust

0.87

Correlation Coefficient

Horizon Spin  First Trust

Very poor diversification

The 3 months correlation between Horizon and First is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Spin Off And and First Trust Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Energy and Horizon Spin 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 Spin Off And are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Energy has no effect on the direction of Horizon Spin i.e., Horizon Spin and First Trust go up and down completely randomly.

Pair Corralation between Horizon Spin and First Trust

If you would invest  2,667  in Horizon Spin Off And on September 2, 2024 and sell it today you would earn a total of  1,902  from holding Horizon Spin Off And or generate 71.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	1.56%
Values	Daily Returns

Horizon Spin Off And  vs.  First Trust Energy

Horizon Spin Off

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Spin Off And are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Horizon Spin showed solid returns over the last few months and may actually be approaching a breakup point.

First Trust Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Trust Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Horizon Spin and First Trust

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

The idea behind Horizon Spin Off And and First Trust Energy 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.