Correlation Between ETC 6 and International Drawdown
Can any of the company-specific risk be diversified away by investing in both ETC 6 and International Drawdown 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 ETC 6 and International Drawdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETC 6 Meridian and International Drawdown Managed, you can compare the effects of market volatilities on ETC 6 and International Drawdown 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 ETC 6 with a short position of International Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC 6 and International Drawdown.
Diversification Opportunities for ETC 6 and International Drawdown
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETC and International is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding ETC 6 Meridian and International Drawdown Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Drawdown and ETC 6 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 ETC 6 Meridian are associated (or correlated) with International Drawdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Drawdown has no effect on the direction of ETC 6 i.e., ETC 6 and International Drawdown go up and down completely randomly.
Pair Corralation between ETC 6 and International Drawdown
Given the investment horizon of 90 days ETC 6 Meridian is expected to generate 0.52 times more return on investment than International Drawdown. However, ETC 6 Meridian is 1.91 times less risky than International Drawdown. It trades about -0.02 of its potential returns per unit of risk. International Drawdown Managed is currently generating about -0.08 per unit of risk. If you would invest 3,741 in ETC 6 Meridian on September 13, 2024 and sell it today you would lose (13.00) from holding ETC 6 Meridian or give up 0.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETC 6 Meridian vs. International Drawdown Managed
Performance |
| Timeline |
| ETC 6 Meridian |
| International Drawdown |
ETC 6 and International Drawdown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETC 6 and International Drawdown
The main advantage of trading using opposite ETC 6 and International Drawdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC 6 position performs unexpectedly, International Drawdown 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 International Drawdown will offset losses from the drop in International Drawdown's long position.| ETC 6 vs. Global X SP | ETC 6 vs. Amplify CWP Enhanced | ETC 6 vs. JPMorgan Nasdaq Equity | ETC 6 vs. NEOS ETF Trust |
| International Drawdown vs. Global X SP | International Drawdown vs. Amplify CWP Enhanced | International Drawdown vs. JPMorgan Nasdaq Equity | International Drawdown vs. NEOS ETF Trust |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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