Correlation Between Alternative Credit and Six Circles
Can any of the company-specific risk be diversified away by investing in both Alternative Credit 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 Alternative Credit and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Credit Income and Six Circles International, you can compare the effects of market volatilities on Alternative Credit 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 Alternative Credit with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Credit and Six Circles.
Diversification Opportunities for Alternative Credit and Six Circles
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alternative and Six is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Credit Income 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 Alternative Credit 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 Alternative Credit Income 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 Alternative Credit i.e., Alternative Credit and Six Circles go up and down completely randomly.
Pair Corralation between Alternative Credit and Six Circles
Assuming the 90 days horizon Alternative Credit Income is expected to generate 0.08 times more return on investment than Six Circles. However, Alternative Credit Income is 11.79 times less risky than Six Circles. It trades about 0.06 of its potential returns per unit of risk. Six Circles International is currently generating about -0.29 per unit of risk. If you would invest 974.00 in Alternative Credit Income on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Alternative Credit Income or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Alternative Credit Income vs. Six Circles International
Performance |
| Timeline |
| Alternative Credit Income |
| Six Circles International |
Alternative Credit and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Credit and Six Circles
The main advantage of trading using opposite Alternative Credit and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Credit 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.| Alternative Credit vs. Vanguard Total Stock | Alternative Credit vs. Vanguard 500 Index | Alternative Credit vs. Vanguard Total Stock | Alternative Credit vs. Vanguard Total Stock |
| Six Circles vs. Six Circles Ultra | Six Circles vs. Six Circles Tax | Six Circles vs. Six Circles Unconstrained | Six Circles vs. Six Circles Global |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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