Correlation Between Great Elm and Sixth Street
Can any of the company-specific risk be diversified away by investing in both Great Elm and Sixth Street 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 Great Elm and Sixth Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Group and Sixth Street Specialty, you can compare the effects of market volatilities on Great Elm and Sixth Street 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 Great Elm with a short position of Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Sixth Street.
Diversification Opportunities for Great Elm and Sixth Street
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Great and Sixth is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Group and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty and Great Elm 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 Great Elm Group are associated (or correlated) with Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Great Elm i.e., Great Elm and Sixth Street go up and down completely randomly.
Pair Corralation between Great Elm and Sixth Street
Considering the 90-day investment horizon Great Elm is expected to generate 21.61 times less return on investment than Sixth Street. In addition to that, Great Elm is 1.56 times more volatile than Sixth Street Specialty. It trades about 0.01 of its total potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.25 per unit of volatility. If you would invest 2,040 in Sixth Street Specialty on September 1, 2024 and sell it today you would earn a total of 108.00 from holding Sixth Street Specialty or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Elm Group vs. Sixth Street Specialty
Performance |
| Timeline |
| Great Elm Group |
| Sixth Street Specialty |
Great Elm and Sixth Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Sixth Street
The main advantage of trading using opposite Great Elm and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, Sixth Street 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 Sixth Street will offset losses from the drop in Sixth Street's long position.| Great Elm vs. Investcorp Credit Management | Great Elm vs. Monroe Capital Corp | Great Elm vs. Allianzgi Convertible Income | Great Elm vs. John Hancock Income |
| Sixth Street vs. Visa Class A | Sixth Street vs. Diamond Hill Investment | Sixth Street vs. Distoken Acquisition | Sixth Street vs. Associated Capital Group |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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