Correlation Between Six Circles and Brown Advisory

Can any of the company-specific risk be diversified away by investing in both Six Circles and Brown Advisory 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 Six Circles and Brown Advisory into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Six Circles International and Brown Advisory , you can compare the effects of market volatilities on Six Circles and Brown Advisory 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 Six Circles with a short position of Brown Advisory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Six Circles and Brown Advisory.

Diversification Opportunities for Six Circles and Brown Advisory

0.94

Correlation Coefficient

Six Circles  Brown Advisory

Almost no diversification

The 3 months correlation between Six and Brown is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles International and Brown Advisory in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory and Six Circles 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 Six Circles International are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory has no effect on the direction of Six Circles i.e., Six Circles and Brown Advisory go up and down completely randomly.

Pair Corralation between Six Circles and Brown Advisory

Assuming the 90 days horizon Six Circles is expected to generate 1.5 times less return on investment than Brown Advisory. But when comparing it to its historical volatility, Six Circles International is 1.07 times less risky than Brown Advisory. It trades about 0.18 of its potential returns per unit of risk. Brown Advisory is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,316  in Brown Advisory on December 27, 2024 and sell it today you would earn a total of  218.00  from holding Brown Advisory or generate 16.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Six Circles International  vs.  Brown Advisory

Six Circles International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Six Circles International are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Six Circles may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Brown Advisory

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Advisory are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Brown Advisory showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Six Circles and Brown Advisory

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

The idea behind Six Circles International and Brown Advisory 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 Transaction History module to view history of all your transactions and understand their impact on performance.