Correlation Between Six Circles and DBGR

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

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

Diversification Opportunities for Six Circles and DBGR

0.06

Correlation Coefficient

Six Circles  DBGR

Significant diversification

The 3 months correlation between Six and DBGR is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles Unconstrained and DBGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBGR 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 Unconstrained are associated (or correlated) with DBGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBGR has no effect on the direction of Six Circles i.e., Six Circles and DBGR go up and down completely randomly.

Pair Corralation between Six Circles and DBGR

If you would invest  3,451  in DBGR on October 11, 2024 and sell it today you would earn a total of  0.00  from holding DBGR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	9.52%
Values	Daily Returns

Six Circles Unconstrained  vs.  DBGR

Six Circles Unconstrained

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Six Circles Unconstrained has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Six Circles is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

DBGR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DBGR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, DBGR is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Six Circles and DBGR

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

The idea behind Six Circles Unconstrained and DBGR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.