Correlation Between ETC 6 and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both ETC 6 and 6 Meridian 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 6 Meridian 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 6 Meridian Small, you can compare the effects of market volatilities on ETC 6 and 6 Meridian 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 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC 6 and 6 Meridian.
Diversification Opportunities for ETC 6 and 6 Meridian
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETC and SIXS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding ETC 6 Meridian and 6 Meridian Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Small 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 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Small has no effect on the direction of ETC 6 i.e., ETC 6 and 6 Meridian go up and down completely randomly.
Pair Corralation between ETC 6 and 6 Meridian
Given the investment horizon of 90 days ETC 6 is expected to generate 1.16 times less return on investment than 6 Meridian. But when comparing it to its historical volatility, ETC 6 Meridian is 2.22 times less risky than 6 Meridian. It trades about 0.06 of its potential returns per unit of risk. 6 Meridian Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,911 in 6 Meridian Small on November 2, 2024 and sell it today you would earn a total of 155.00 from holding 6 Meridian Small or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.04% |
| Values | Daily Returns |
ETC 6 Meridian vs. 6 Meridian Small
Performance |
| Timeline |
| ETC 6 Meridian |
| 6 Meridian Small |
ETC 6 and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETC 6 and 6 Meridian
The main advantage of trading using opposite ETC 6 and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC 6 position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.| ETC 6 vs. 6 Meridian Mega | ETC 6 vs. 6 Meridian Low | ETC 6 vs. 6 Meridian Small | ETC 6 vs. Overlay Shares Large |
| 6 Meridian vs. 6 Meridian Mega | 6 Meridian vs. 6 Meridian Low | 6 Meridian vs. ETC 6 Meridian | 6 Meridian vs. Two Roads Shared |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |