Correlation Between Health Care and Horizon Kinetics

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

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

Diversification Opportunities for Health Care and Horizon Kinetics

-0.74

Correlation Coefficient

Health Care  Horizon Kinetics

Pay attention - limited upside

The 3 months correlation between Health and Horizon is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Select and Horizon Kinetics SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics SPAC and Health Care 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 Health Care Select 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 SPAC has no effect on the direction of Health Care i.e., Health Care and Horizon Kinetics go up and down completely randomly.

Pair Corralation between Health Care and Horizon Kinetics

Considering the 90-day investment horizon Health Care Select is expected to under-perform the Horizon Kinetics. But the etf apears to be less risky and, when comparing its historical volatility, Health Care Select is 1.02 times less risky than Horizon Kinetics. The etf trades about -0.14 of its potential returns per unit of risk. The Horizon Kinetics SPAC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,938  in Horizon Kinetics SPAC on August 30, 2024 and sell it today you would earn a total of  126.00  from holding Horizon Kinetics SPAC or generate 1.27% return on investment over 90 days.

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

Health Care Select  vs.  Horizon Kinetics SPAC

Health Care Select

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Health Care Select has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Health Care is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Horizon Kinetics SPAC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Kinetics SPAC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Horizon Kinetics is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Health Care and Horizon Kinetics

The main advantage of trading using opposite Health Care and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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 Health Care Select and Horizon Kinetics SPAC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..