Correlation Between Buffalo High and Six Circles
Can any of the company-specific risk be diversified away by investing in both Buffalo High 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 Buffalo High and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buffalo High Yield and Six Circles Credit, you can compare the effects of market volatilities on Buffalo High 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 Buffalo High with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo High and Six Circles.
Diversification Opportunities for Buffalo High and Six Circles
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BUFFALO and Six is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo High Yield and Six Circles Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Credit and Buffalo High 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 Buffalo High Yield 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 Credit has no effect on the direction of Buffalo High i.e., Buffalo High and Six Circles go up and down completely randomly.
Pair Corralation between Buffalo High and Six Circles
Assuming the 90 days horizon Buffalo High is expected to generate 6.0 times less return on investment than Six Circles. But when comparing it to its historical volatility, Buffalo High Yield is 1.62 times less risky than Six Circles. It trades about 0.12 of its potential returns per unit of risk. Six Circles Credit is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 888.00 in Six Circles Credit on December 5, 2024 and sell it today you would earn a total of 10.00 from holding Six Circles Credit or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buffalo High Yield vs. Six Circles Credit
Performance |
| Timeline |
| Buffalo High Yield |
| Six Circles Credit |
Buffalo High and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buffalo High and Six Circles
The main advantage of trading using opposite Buffalo High and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo High 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.| Buffalo High vs. Buffalo Flexible Income | ||
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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