Correlation Between Sixth Street and Great Elm
Can any of the company-specific risk be diversified away by investing in both Sixth Street and Great Elm 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 Great Elm 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 Great Elm Group, you can compare the effects of market volatilities on Sixth Street and Great Elm 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 Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixth Street and Great Elm.
Diversification Opportunities for Sixth Street and Great Elm
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sixth and Great is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sixth Street Specialty and Great Elm Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Group 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 Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Group has no effect on the direction of Sixth Street i.e., Sixth Street and Great Elm go up and down completely randomly.
Pair Corralation between Sixth Street and Great Elm
Given the investment horizon of 90 days Sixth Street Specialty is expected to generate 0.64 times more return on investment than Great Elm. However, Sixth Street Specialty is 1.56 times less risky than Great Elm. It trades about 0.25 of its potential returns per unit of risk. Great Elm Group is currently generating about 0.01 per unit of risk. If you would invest 2,040 in Sixth Street Specialty on September 1, 2024 and sell it today you would earn a total of 108.00 from holding Sixth Street Specialty or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sixth Street Specialty vs. Great Elm Group
Performance |
| Timeline |
| Sixth Street Specialty |
| Great Elm Group |
Sixth Street and Great Elm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixth Street and Great Elm
The main advantage of trading using opposite Sixth Street and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixth Street position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.| Sixth Street vs. Visa Class A | Sixth Street vs. Diamond Hill Investment | Sixth Street vs. Distoken Acquisition | Sixth Street vs. Associated Capital Group |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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