Correlation Between Global Gold and Six Circles
Can any of the company-specific risk be diversified away by investing in both Global Gold and Six Circles 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 Global Gold and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and Six Circles Unconstrained, you can compare the effects of market volatilities on Global Gold and Six Circles 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 Global Gold with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Six Circles.
Diversification Opportunities for Global Gold and Six Circles
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Global and Six is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Six Circles Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Unconstrained and Global Gold 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 Global Gold Fund are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles Unconstrained has no effect on the direction of Global Gold i.e., Global Gold and Six Circles go up and down completely randomly.
Pair Corralation between Global Gold and Six Circles
Assuming the 90 days horizon Global Gold Fund is expected to under-perform the Six Circles. In addition to that, Global Gold is 2.68 times more volatile than Six Circles Unconstrained. It trades about -0.04 of its total potential returns per unit of risk. Six Circles Unconstrained is currently generating about 0.09 per unit of volatility. If you would invest 1,866 in Six Circles Unconstrained on September 13, 2024 and sell it today you would earn a total of 48.00 from holding Six Circles Unconstrained or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. Six Circles Unconstrained
Performance |
| Timeline |
| Global Gold Fund |
| Six Circles Unconstrained |
Global Gold and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and Six Circles
The main advantage of trading using opposite Global Gold and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Six Circles 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 Six Circles will offset losses from the drop in Six Circles' long position.| Global Gold vs. Equity Growth Fund | Global Gold vs. Income Growth Fund | Global Gold vs. Diversified Bond Fund | Global Gold vs. Emerging Markets Fund |
| Six Circles vs. Franklin Federal Limited Term | Six Circles vs. Quantitative Longshort Equity | Six Circles vs. Lord Abbett Short | Six Circles vs. Easterly Snow Longshort |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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