Correlation Between Carlyle Secured and Sixth Street

Can any of the company-specific risk be diversified away by investing in both Carlyle Secured and Sixth Street 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 Carlyle Secured and Sixth Street into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlyle Secured Lending and Sixth Street Specialty, you can compare the effects of market volatilities on Carlyle Secured and Sixth Street 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 Carlyle Secured with a short position of Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle Secured and Sixth Street.

Diversification Opportunities for Carlyle Secured and Sixth Street

0.66

Correlation Coefficient

Carlyle Secured  Sixth Street

Poor diversification

The 3 months correlation between Carlyle and Sixth is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Secured Lending and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty and Carlyle Secured 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 Carlyle Secured Lending are associated (or correlated) with Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Carlyle Secured i.e., Carlyle Secured and Sixth Street go up and down completely randomly.

Pair Corralation between Carlyle Secured and Sixth Street

Given the investment horizon of 90 days Carlyle Secured is expected to generate 2.56 times less return on investment than Sixth Street. In addition to that, Carlyle Secured is 1.33 times more volatile than Sixth Street Specialty. It trades about 0.07 of its total potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.23 per unit of volatility. If you would invest  2,102  in Sixth Street Specialty on November 28, 2024 and sell it today you would earn a total of  216.00  from holding Sixth Street Specialty or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Carlyle Secured Lending  vs.  Sixth Street Specialty

Carlyle Secured Lending

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Secured Lending are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sixth Street Specialty

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sixth Street Specialty are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Sixth Street may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Carlyle Secured and Sixth Street

The main advantage of trading using opposite Carlyle Secured and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle Secured position performs unexpectedly, Sixth Street 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 Sixth Street will offset losses from the drop in Sixth Street's long position.

The idea behind Carlyle Secured Lending and Sixth Street Specialty 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.