Correlation Between Six Circles and Highland Merger
Can any of the company-specific risk be diversified away by investing in both Six Circles and Highland Merger 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 Six Circles and Highland Merger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Six Circles Managed and Highland Merger Arbitrage, you can compare the effects of market volatilities on Six Circles and Highland Merger 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 Six Circles with a short position of Highland Merger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Circles and Highland Merger.
Diversification Opportunities for Six Circles and Highland Merger
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Six and Highland is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles Managed and Highland Merger Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Merger Arbitrage and Six Circles 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 Six Circles Managed are associated (or correlated) with Highland Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Merger Arbitrage has no effect on the direction of Six Circles i.e., Six Circles and Highland Merger go up and down completely randomly.
Pair Corralation between Six Circles and Highland Merger
Assuming the 90 days horizon Six Circles Managed is expected to generate 7.94 times more return on investment than Highland Merger. However, Six Circles is 7.94 times more volatile than Highland Merger Arbitrage. It trades about 0.18 of its potential returns per unit of risk. Highland Merger Arbitrage is currently generating about 0.11 per unit of risk. If you would invest 2,071 in Six Circles Managed on August 29, 2024 and sell it today you would earn a total of 69.00 from holding Six Circles Managed or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Six Circles Managed vs. Highland Merger Arbitrage
Performance |
| Timeline |
| Six Circles Managed |
| Highland Merger Arbitrage |
Six Circles and Highland Merger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Six Circles and Highland Merger
The main advantage of trading using opposite Six Circles and Highland Merger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Six Circles position performs unexpectedly, Highland Merger 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 Highland Merger will offset losses from the drop in Highland Merger's long position.| Six Circles vs. Jhancock Disciplined Value | Six Circles vs. Qs Large Cap | Six Circles vs. Aqr Large Cap | Six Circles vs. T Rowe Price |
| Highland Merger vs. Old Westbury Large | Highland Merger vs. Gmo Equity Allocation | Highland Merger vs. Aqr Large Cap | Highland Merger vs. Federated Mdt Large |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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