Correlation Between ETC 6 and SPKY
Can any of the company-specific risk be diversified away by investing in both ETC 6 and SPKY 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 SPKY 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 SPKY, you can compare the effects of market volatilities on ETC 6 and SPKY 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 SPKY. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC 6 and SPKY.
Diversification Opportunities for ETC 6 and SPKY
Pay attention - limited upside
The 3 months correlation between ETC and SPKY is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding ETC 6 Meridian and SPKY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPKY 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 SPKY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPKY has no effect on the direction of ETC 6 i.e., ETC 6 and SPKY go up and down completely randomly.
Pair Corralation between ETC 6 and SPKY
Given the investment horizon of 90 days ETC 6 Meridian is expected to generate 0.09 times more return on investment than SPKY. However, ETC 6 Meridian is 11.56 times less risky than SPKY. It trades about 0.08 of its potential returns per unit of risk. SPKY is currently generating about -0.17 per unit of risk. If you would invest 3,136 in ETC 6 Meridian on September 14, 2024 and sell it today you would earn a total of 594.60 from holding ETC 6 Meridian or generate 18.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 29.09% |
| Values | Daily Returns |
ETC 6 Meridian vs. SPKY
Performance |
| Timeline |
| ETC 6 Meridian |
| SPKY |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ETC 6 and SPKY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETC 6 and SPKY
The main advantage of trading using opposite ETC 6 and SPKY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC 6 position performs unexpectedly, SPKY 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 SPKY will offset losses from the drop in SPKY's long position.The idea behind ETC 6 Meridian and SPKY pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| SPKY vs. ProShares UltraShort Yen | SPKY vs. ProShares Ultra Telecommunications | SPKY vs. ProShares Ultra Consumer | SPKY vs. ProShares Ultra Consumer |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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