Correlation Between Six Circles and Six Circles

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

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

Diversification Opportunities for Six Circles and Six Circles

0.95

Correlation Coefficient

Six Circles  Six Circles

Almost no diversification

The 3 months correlation between Six and Six is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles Managed and Six Circles Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Ultra 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 Managed 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 Ultra has no effect on the direction of Six Circles i.e., Six Circles and Six Circles go up and down completely randomly.

Pair Corralation between Six Circles and Six Circles

Assuming the 90 days horizon Six Circles Managed is expected to generate 20.41 times more return on investment than Six Circles. However, Six Circles is 20.41 times more volatile than Six Circles Ultra. It trades about 0.15 of its potential returns per unit of risk. Six Circles Ultra is currently generating about 0.39 per unit of risk. If you would invest  1,295  in Six Circles Managed on December 26, 2024 and sell it today you would earn a total of  118.00  from holding Six Circles Managed or generate 9.11% 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 Managed  vs.  Six Circles Ultra

Six Circles Managed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Six Circles Managed are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Six Circles may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Six Circles Ultra

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Six Circles Ultra are ranked lower than 30 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Six Circles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Six Circles and Six Circles

The main advantage of trading using opposite Six Circles and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Six Circles 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.

The idea behind Six Circles Managed and Six Circles Ultra 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.