Correlation Between Xtrackers and 6 Meridian
Can any of the company-specific risk be diversified away by investing in both Xtrackers 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 Xtrackers and 6 Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers SP 500 and 6 Meridian Small, you can compare the effects of market volatilities on Xtrackers 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 Xtrackers with a short position of 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers and 6 Meridian.
Diversification Opportunities for Xtrackers and 6 Meridian
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xtrackers and SIXS is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers SP 500 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 Xtrackers 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 Xtrackers SP 500 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 Xtrackers i.e., Xtrackers and 6 Meridian go up and down completely randomly.
Pair Corralation between Xtrackers and 6 Meridian
Given the investment horizon of 90 days Xtrackers SP 500 is expected to generate 0.62 times more return on investment than 6 Meridian. However, Xtrackers SP 500 is 1.6 times less risky than 6 Meridian. It trades about 0.19 of its potential returns per unit of risk. 6 Meridian Small is currently generating about 0.1 per unit of risk. If you would invest 5,045 in Xtrackers SP 500 on September 2, 2024 and sell it today you would earn a total of 460.00 from holding Xtrackers SP 500 or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers SP 500 vs. 6 Meridian Small
Performance |
| Timeline |
| Xtrackers SP 500 |
| 6 Meridian Small |
Xtrackers and 6 Meridian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers and 6 Meridian
The main advantage of trading using opposite Xtrackers and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers 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.| Xtrackers vs. Xtrackers MSCI USA | Xtrackers vs. iShares ESG MSCI | Xtrackers vs. SPDR SP 500 | Xtrackers vs. iShares MSCI USA |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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