Correlation Between Horizon Active and First Trust

Can any of the company-specific risk be diversified away by investing in both Horizon Active 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 Active 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 Active Asset and First Trust Multi Strategy, you can compare the effects of market volatilities on Horizon Active 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 Active with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Active and First Trust.

Diversification Opportunities for Horizon Active and First Trust

0.98

Correlation Coefficient

Horizon Active  First Trust

Almost no diversification

The 3 months correlation between Horizon and First is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Asset and First Trust Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Multi 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 Asset 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 Multi has no effect on the direction of Horizon Active i.e., Horizon Active and First Trust go up and down completely randomly.

Pair Corralation between Horizon Active and First Trust

Assuming the 90 days horizon Horizon Active Asset is expected to generate 4.86 times more return on investment than First Trust. However, Horizon Active is 4.86 times more volatile than First Trust Multi Strategy. It trades about 0.27 of its potential returns per unit of risk. First Trust Multi Strategy is currently generating about 0.34 per unit of risk. If you would invest  1,266  in Horizon Active Asset on May 1, 2025 and sell it today you would earn a total of  146.00  from holding Horizon Active Asset or generate 11.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Horizon Active Asset  vs.  First Trust Multi Strategy

Horizon Active Asset

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Active Asset are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Horizon Active may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Trust Multi

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Multi Strategy are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Horizon Active and First Trust

The main advantage of trading using opposite Horizon Active and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Active 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 Active Asset and First Trust Multi Strategy 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.