what is horizon analysis 
horizon analysis compares the projected discounted returns of a security or investment portfolio s total returns over several time frames or investment horizons understanding horizon analysishorizon analysis uses scenario analysis to estimate a more realistic expectation of an investment or portfolio s performance typically this type of analysis is used to gauge the expected performance of portfolios comprised of fixed income securities bonds the horizon analysis framework allows portfolio managers to project the performance of bonds on the basis of the planned investment horizon and expectations concerning levels of risk interest rates reinvestment rates and future market yields by breaking down expected returns into scenarios it is possible to evaluate which bonds would perform the best over the planned investment horizon something that would not be possible using the yield to maturity ytm this scenario analysis enables the portfolio manager to see how sensitive a bond s performance will be to each scenario and whether it would be likely to meet their investor s goals over their expected investment horizon horizontal analysis is used in financial statement analysis to compare historical data such as ratios or line items over a number of accounting periods investment horizons and portfolio construction