Correlation Between 6 Meridian and 6 Meridian

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

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

Diversification Opportunities for 6 Meridian and 6 Meridian

0.85

Correlation Coefficient

6 Meridian  6 Meridian

Very poor diversification

The 3 months correlation between SIXA and SIXL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding 6 Meridian Mega and 6 Meridian Low in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Low and 6 Meridian 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 6 Meridian Mega are associated (or correlated) with 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Low has no effect on the direction of 6 Meridian i.e., 6 Meridian and 6 Meridian go up and down completely randomly.

Pair Corralation between 6 Meridian and 6 Meridian

Given the investment horizon of 90 days 6 Meridian is expected to generate 1.03 times less return on investment than 6 Meridian. But when comparing it to its historical volatility, 6 Meridian Mega is 1.15 times less risky than 6 Meridian. It trades about 0.16 of its potential returns per unit of risk. 6 Meridian Low is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,706  in 6 Meridian Low on September 4, 2024 and sell it today you would earn a total of  218.00  from holding 6 Meridian Low or generate 5.88% return on investment over 90 days.

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

6 Meridian Mega  vs.  6 Meridian Low

6 Meridian Mega

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Mega are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 6 Meridian is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

6 Meridian Low

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Low are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, 6 Meridian is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with 6 Meridian and 6 Meridian

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

The idea behind 6 Meridian Mega and 6 Meridian Low 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 Global Correlations module to find global opportunities by holding instruments from different markets.