Correlation Between Global X and Horizon Kinetics

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

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

Diversification Opportunities for Global X and Horizon Kinetics

0.89

Correlation Coefficient

Global X  Horizon Kinetics

Very poor diversification

The 3 months correlation between Global and Horizon is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Global X Renewable and Horizon Kinetics Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Kinetics Medical and Global X 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 Global X Renewable 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 Medical has no effect on the direction of Global X i.e., Global X and Horizon Kinetics go up and down completely randomly.

Pair Corralation between Global X and Horizon Kinetics

Given the investment horizon of 90 days Global X Renewable is expected to generate 1.37 times more return on investment than Horizon Kinetics. However, Global X is 1.37 times more volatile than Horizon Kinetics Medical. It trades about -0.17 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about -0.23 per unit of risk. If you would invest  992.00  in Global X Renewable on August 29, 2024 and sell it today you would lose (60.00) from holding Global X Renewable or give up 6.05% of portfolio value over 90 days.

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

Global X Renewable  vs.  Horizon Kinetics Medical

Global X Renewable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X Renewable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Horizon Kinetics Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Kinetics Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Etf's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Global X and Horizon Kinetics

The main advantage of trading using opposite Global X and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X Renewable and Horizon Kinetics Medical 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.