Correlation Between Horizon Active and Kkr Income

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

By analyzing existing cross correlation between Horizon Active Risk and Kkr Income Opportunities, you can compare the effects of market volatilities on Horizon Active and Kkr Income 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 Kkr Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Active and Kkr Income.

Diversification Opportunities for Horizon Active and Kkr Income

0.55

Correlation Coefficient

Horizon Active  Kkr Income

Very weak diversification

The 3 months correlation between Horizon and Kkr is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Active Risk and Kkr Income Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kkr Income Opportunities 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 Risk are associated (or correlated) with Kkr Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kkr Income Opportunities has no effect on the direction of Horizon Active i.e., Horizon Active and Kkr Income go up and down completely randomly.

Pair Corralation between Horizon Active and Kkr Income

Assuming the 90 days horizon Horizon Active Risk is expected to generate 1.01 times more return on investment than Kkr Income. However, Horizon Active is 1.01 times more volatile than Kkr Income Opportunities. It trades about 0.17 of its potential returns per unit of risk. Kkr Income Opportunities is currently generating about 0.14 per unit of risk. If you would invest  2,504  in Horizon Active Risk on March 11, 2024 and sell it today you would earn a total of  47.00  from holding Horizon Active Risk or generate 1.88% return on investment over 90 days.

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

Horizon Active Risk  vs.  Kkr Income Opportunities

Horizon Active Risk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Active Risk are ranked lower than 6 (%) 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.

Kkr Income Opportunities

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kkr Income Opportunities are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of very healthy forward indicators, Kkr Income is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Horizon Active and Kkr Income

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

The idea behind Horizon Active Risk and Kkr Income Opportunities 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.