Correlation Between HORIZON ACTIVE and PIMCO ALL

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Can any of the company-specific risk be diversified away by investing in both HORIZON ACTIVE and PIMCO ALL 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 PIMCO ALL 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 PIMCO ALL ASSET, you can compare the effects of market volatilities on HORIZON ACTIVE and PIMCO ALL 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 PIMCO ALL. Check out your portfolio center. Please also check ongoing floating volatility patterns of HORIZON ACTIVE and PIMCO ALL.

Diversification Opportunities for HORIZON ACTIVE and PIMCO ALL

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between HORIZON and PIMCO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding HORIZON ACTIVE ASSET and PIMCO ALL ASSET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO ALL ASSET 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 PIMCO ALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO ALL ASSET has no effect on the direction of HORIZON ACTIVE i.e., HORIZON ACTIVE and PIMCO ALL go up and down completely randomly.

Pair Corralation between HORIZON ACTIVE and PIMCO ALL

Assuming the 90 days horizon HORIZON ACTIVE is expected to generate 2.0 times less return on investment than PIMCO ALL. In addition to that, HORIZON ACTIVE is 1.99 times more volatile than PIMCO ALL ASSET. It trades about 0.0 of its total potential returns per unit of risk. PIMCO ALL ASSET is currently generating about 0.01 per unit of volatility. If you would invest  1,091  in PIMCO ALL ASSET on November 5, 2022 and sell it today you would earn a total of  13.00  from holding PIMCO ALL ASSET or generate 1.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

HORIZON ACTIVE ASSET  vs.  PIMCO ALL ASSET

 Performance (%) 
       Timeline  
HORIZON ACTIVE ASSET 
HORIZON Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in HORIZON ACTIVE ASSET are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, HORIZON ACTIVE may actually be approaching a critical reversion point that can send shares even higher in March 2023.

HORIZON Price Channel

PIMCO ALL ASSET 
PIMCO Performance
18 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in PIMCO ALL ASSET are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady basic indicators, PIMCO ALL may actually be approaching a critical reversion point that can send shares even higher in March 2023.

PIMCO Price Channel

HORIZON ACTIVE and PIMCO ALL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HORIZON ACTIVE and PIMCO ALL

The main advantage of trading using opposite HORIZON ACTIVE and PIMCO ALL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HORIZON ACTIVE position performs unexpectedly, PIMCO ALL 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 PIMCO ALL will offset losses from the drop in PIMCO ALL's long position.
HORIZON ACTIVE vs. General Electric
HORIZON ACTIVE vs. HUMANA INC
HORIZON ACTIVE vs. SPDR Russell 1000
HORIZON ACTIVE vs. Unified Series Trust
The idea behind HORIZON ACTIVE ASSET and PIMCO ALL ASSET 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.
PIMCO ALL vs. General Electric
PIMCO ALL vs. HUMANA INC
PIMCO ALL vs. SPDR Russell 1000
PIMCO ALL vs. Unified Series Trust
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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