Correlation Between Horizon Active and Via Renewables

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

By analyzing existing cross correlation between Horizon Active Income and Via Renewables, you can compare the effects of market volatilities on Horizon Active and Via Renewables 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 Active with a short position of Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Active and Via Renewables.

Diversification Opportunities for Horizon Active and Via Renewables

0.2

Correlation Coefficient

Horizon Active  Via Renewables

Modest diversification

The 3 months correlation between Horizon and Via is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Income and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Horizon Active 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 Active Income are associated (or correlated) with Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Horizon Active i.e., Horizon Active and Via Renewables go up and down completely randomly.

Pair Corralation between Horizon Active and Via Renewables

Assuming the 90 days horizon Horizon Active Income is expected to under-perform the Via Renewables. But the mutual fund apears to be less risky and, when comparing its historical volatility, Horizon Active Income is 2.84 times less risky than Via Renewables. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Via Renewables is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,050  in Via Renewables on August 12, 2024 and sell it today you would earn a total of  85.00  from holding Via Renewables or generate 4.15% return on investment over 90 days.

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

Horizon Active Income  vs.  Via Renewables

Horizon Active Income

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Active Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Horizon Active is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Via Renewables

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Horizon Active and Via Renewables

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

The idea behind Horizon Active Income and Via Renewables 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.