Correlation Between Government Securities and Six Circles
Can any of the company-specific risk be diversified away by investing in both Government Securities and Six Circles 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 Government Securities and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Six Circles Managed, you can compare the effects of market volatilities on Government Securities and Six Circles 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 Government Securities with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Six Circles.
Diversification Opportunities for Government Securities and Six Circles
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Government and Six is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Six Circles Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Managed and Government Securities 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 Government Securities Fund are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles Managed has no effect on the direction of Government Securities i.e., Government Securities and Six Circles go up and down completely randomly.
Pair Corralation between Government Securities and Six Circles
Assuming the 90 days horizon Government Securities is expected to generate 3.29 times less return on investment than Six Circles. But when comparing it to its historical volatility, Government Securities Fund is 2.48 times less risky than Six Circles. It trades about 0.04 of its potential returns per unit of risk. Six Circles Managed is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,095 in Six Circles Managed on September 2, 2024 and sell it today you would earn a total of 261.00 from holding Six Circles Managed or generate 23.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Government Securities Fund vs. Six Circles Managed
Performance |
| Timeline |
| Government Securities |
| Six Circles Managed |
Government Securities and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Securities and Six Circles
The main advantage of trading using opposite Government Securities and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities position performs unexpectedly, Six Circles 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 Six Circles will offset losses from the drop in Six Circles' long position.| Government Securities vs. Sarofim Equity | Government Securities vs. Ms Global Fixed | Government Securities vs. Balanced Fund Retail | Government Securities vs. Ultra Short Fixed Income |
| Six Circles vs. Eagle Mlp Strategy | Six Circles vs. Black Oak Emerging | Six Circles vs. Investec Emerging Markets | Six Circles vs. Shelton Emerging Markets |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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