Correlation Between Sixth Street and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Sixth Street and Cornerstone Strategic 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 Sixth Street and Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sixth Street Specialty and Cornerstone Strategic Value, you can compare the effects of market volatilities on Sixth Street and Cornerstone Strategic 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 Sixth Street with a short position of Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixth Street and Cornerstone Strategic.
Diversification Opportunities for Sixth Street and Cornerstone Strategic
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sixth and Cornerstone is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sixth Street Specialty and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Sixth Street 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 Sixth Street Specialty are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Sixth Street i.e., Sixth Street and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Sixth Street and Cornerstone Strategic
Given the investment horizon of 90 days Sixth Street is expected to generate 6.13 times less return on investment than Cornerstone Strategic. In addition to that, Sixth Street is 1.1 times more volatile than Cornerstone Strategic Value. It trades about 0.09 of its total potential returns per unit of risk. Cornerstone Strategic Value is currently generating about 0.62 per unit of volatility. If you would invest 791.00 in Cornerstone Strategic Value on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Cornerstone Strategic Value or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sixth Street Specialty vs. Cornerstone Strategic Value
Performance |
| Timeline |
| Sixth Street Specialty |
| Cornerstone Strategic |
Sixth Street and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixth Street and Cornerstone Strategic
The main advantage of trading using opposite Sixth Street and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixth Street position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.The idea behind Sixth Street Specialty and Cornerstone Strategic Value 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.| Cornerstone Strategic vs. Gabelli Global Small | Cornerstone Strategic vs. MFS Investment Grade | Cornerstone Strategic vs. Eaton Vance National | Cornerstone Strategic vs. GAMCO Natural Resources |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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