Correlation Between VanEck Mortgage and Horizon Kinetics

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

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

Diversification Opportunities for VanEck Mortgage and Horizon Kinetics

0.2

Correlation Coefficient

VanEck Mortgage  Horizon Kinetics

Modest diversification

The 3 months correlation between VanEck and Horizon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Mortgage REIT 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 VanEck Mortgage 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 VanEck Mortgage REIT 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 VanEck Mortgage i.e., VanEck Mortgage and Horizon Kinetics go up and down completely randomly.

Pair Corralation between VanEck Mortgage and Horizon Kinetics

Given the investment horizon of 90 days VanEck Mortgage REIT is expected to generate 2.41 times more return on investment than Horizon Kinetics. However, VanEck Mortgage is 2.41 times more volatile than Horizon Kinetics Medical. It trades about -0.11 of its potential returns per unit of risk. Horizon Kinetics Medical is currently generating about -0.51 per unit of risk. If you would invest  1,138  in VanEck Mortgage REIT on January 28, 2024 and sell it today you would lose (50.00) from holding VanEck Mortgage REIT or give up 4.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

VanEck Mortgage REIT  vs.  Horizon Kinetics Medical

VanEck Mortgage REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Mortgage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VanEck Mortgage is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 fairly strong fundamental indicators, Horizon Kinetics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with VanEck Mortgage and Horizon Kinetics

The main advantage of trading using opposite VanEck Mortgage and Horizon Kinetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Mortgage 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 VanEck Mortgage REIT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.