Correlation Between Six Circles and Barings High

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

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

Diversification Opportunities for Six Circles and Barings High

0.72

Correlation Coefficient

Six Circles  Barings High

Poor diversification

The 3 months correlation between Six and Barings is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Six Circles Tax and Barings High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings High Yield 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 Tax are associated (or correlated) with Barings High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings High Yield has no effect on the direction of Six Circles i.e., Six Circles and Barings High go up and down completely randomly.

Pair Corralation between Six Circles and Barings High

Assuming the 90 days horizon Six Circles is expected to generate 1.12 times less return on investment than Barings High. But when comparing it to its historical volatility, Six Circles Tax is 4.82 times less risky than Barings High. It trades about 0.45 of its potential returns per unit of risk. Barings High Yield is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  798.00  in Barings High Yield on December 19, 2024 and sell it today you would earn a total of  9.00  from holding Barings High Yield or generate 1.13% return on investment over 90 days.

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

Six Circles Tax  vs.  Barings High Yield

Six Circles Tax

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Six Circles Tax are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. 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.

Barings High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barings High Yield are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings High 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 Barings High

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

The idea behind Six Circles Tax and Barings High Yield 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.