Correlation Between Kava and Horizon Bancorp

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

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

Diversification Opportunities for Kava and Horizon Bancorp

0.0

Correlation Coefficient

Kava  Horizon Bancorp

Pay attention - limited upside

The 3 months correlation between Kava and Horizon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kava and Horizon Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Bancorp and Kava 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 Kava are associated (or correlated) with Horizon Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Bancorp has no effect on the direction of Kava i.e., Kava and Horizon Bancorp go up and down completely randomly.

Pair Corralation between Kava and Horizon Bancorp

If you would invest (100.00) in Horizon Bancorp on January 26, 2024 and sell it today you would earn a total of  100.00  from holding Horizon Bancorp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Kava  vs.  Horizon Bancorp

Kava

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kava are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Kava may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Horizon Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Horizon Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Horizon Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kava and Horizon Bancorp

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

The idea behind Kava and Horizon Bancorp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.