Correlation Between ETC 6 and International Drawdown

Can any of the company-specific risk be diversified away by investing in both ETC 6 and International Drawdown 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 ETC 6 and International Drawdown into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETC 6 Meridian and International Drawdown Managed, you can compare the effects of market volatilities on ETC 6 and International Drawdown 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 ETC 6 with a short position of International Drawdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC 6 and International Drawdown.

Diversification Opportunities for ETC 6 and International Drawdown

0.91

Correlation Coefficient

ETC 6  International Drawdown

Almost no diversification

The 3 months correlation between ETC and International is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding ETC 6 Meridian and International Drawdown Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Drawdown and ETC 6 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 ETC 6 Meridian are associated (or correlated) with International Drawdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Drawdown has no effect on the direction of ETC 6 i.e., ETC 6 and International Drawdown go up and down completely randomly.

Pair Corralation between ETC 6 and International Drawdown

Given the investment horizon of 90 days ETC 6 Meridian is expected to generate 0.91 times more return on investment than International Drawdown. However, ETC 6 Meridian is 1.1 times less risky than International Drawdown. It trades about 0.16 of its potential returns per unit of risk. International Drawdown Managed is currently generating about 0.13 per unit of risk. If you would invest  3,643  in ETC 6 Meridian on December 29, 2024 and sell it today you would earn a total of  243.00  from holding ETC 6 Meridian or generate 6.67% return on investment over 90 days.

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

ETC 6 Meridian  vs.  International Drawdown Managed

ETC 6 Meridian

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ETC 6 Meridian are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, ETC 6 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

International Drawdown

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Drawdown Managed are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, International Drawdown is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ETC 6 and International Drawdown

The main advantage of trading using opposite ETC 6 and International Drawdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETC 6 position performs unexpectedly, International Drawdown 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 International Drawdown will offset losses from the drop in International Drawdown's long position.

The idea behind ETC 6 Meridian and International Drawdown Managed 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.