Correlation Between Cion Investment and Sixth Street

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

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

Diversification Opportunities for Cion Investment and Sixth Street

0.4

Correlation Coefficient

Cion Investment  Sixth Street

Very weak diversification

The 3 months correlation between Cion and Sixth is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cion Investment Corp 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 Cion Investment 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 Cion Investment Corp 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 Cion Investment i.e., Cion Investment and Sixth Street go up and down completely randomly.

Pair Corralation between Cion Investment and Sixth Street

Given the investment horizon of 90 days Cion Investment is expected to generate 3.87 times less return on investment than Sixth Street. In addition to that, Cion Investment is 1.9 times more volatile than Sixth Street Specialty. It trades about 0.05 of its total potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.34 per unit of volatility. If you would invest  2,093  in Sixth Street Specialty on October 24, 2024 and sell it today you would earn a total of  72.00  from holding Sixth Street Specialty or generate 3.44% return on investment over 90 days.

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

Cion Investment Corp  vs.  Sixth Street Specialty

Cion Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cion Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cion Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Sixth Street Specialty

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sixth Street Specialty are ranked lower than 11 (%) 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 February 2025.

Pair Trading with Cion Investment and Sixth Street

The main advantage of trading using opposite Cion Investment and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cion Investment 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 Cion Investment Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.