Correlation Between Absolute Convertible and Six Circles
Can any of the company-specific risk be diversified away by investing in both Absolute Convertible 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 Absolute Convertible and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absolute Convertible Arbitrage and Six Circles International, you can compare the effects of market volatilities on Absolute Convertible 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 Absolute Convertible with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absolute Convertible and Six Circles.
Diversification Opportunities for Absolute Convertible and Six Circles
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Absolute and Six is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Convertible Arbitrage and Six Circles International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles International and Absolute Convertible 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 Absolute Convertible Arbitrage 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 International has no effect on the direction of Absolute Convertible i.e., Absolute Convertible and Six Circles go up and down completely randomly.
Pair Corralation between Absolute Convertible and Six Circles
Assuming the 90 days horizon Absolute Convertible Arbitrage is expected to generate 0.05 times more return on investment than Six Circles. However, Absolute Convertible Arbitrage is 19.45 times less risky than Six Circles. It trades about 0.53 of its potential returns per unit of risk. Six Circles International is currently generating about -0.1 per unit of risk. If you would invest 1,144 in Absolute Convertible Arbitrage on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Absolute Convertible Arbitrage or generate 0.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absolute Convertible Arbitrage vs. Six Circles International
Performance |
| Timeline |
| Absolute Convertible |
| Six Circles International |
Absolute Convertible and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absolute Convertible and Six Circles
The main advantage of trading using opposite Absolute Convertible and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Convertible 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.| Absolute Convertible vs. Dunham Porategovernment Bond | Absolute Convertible vs. John Hancock Government | Absolute Convertible vs. Government Securities Fund | Absolute Convertible vs. Ab Government Exchange |
| Six Circles vs. Vanguard European Stock | Six Circles vs. Vanguard European Stock | Six Circles vs. Invesco European Growth | Six Circles vs. Invesco European Growth |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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