Correlation Between ETC 6 and Nicholas Global

Can any of the company-specific risk be diversified away by investing in both ETC 6 and Nicholas Global 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 Nicholas Global 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 Nicholas Global Equity, you can compare the effects of market volatilities on ETC 6 and Nicholas Global 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 Nicholas Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC 6 and Nicholas Global.

Diversification Opportunities for ETC 6 and Nicholas Global

0.84

Correlation Coefficient

ETC 6  Nicholas Global

Very poor diversification

The 3 months correlation between ETC and Nicholas is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ETC 6 Meridian and Nicholas Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Global Equity 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 Nicholas Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Global Equity has no effect on the direction of ETC 6 i.e., ETC 6 and Nicholas Global go up and down completely randomly.

Pair Corralation between ETC 6 and Nicholas Global

Given the investment horizon of 90 days ETC 6 Meridian is expected to generate 0.83 times more return on investment than Nicholas Global. However, ETC 6 Meridian is 1.2 times less risky than Nicholas Global. It trades about -0.01 of its potential returns per unit of risk. Nicholas Global Equity is currently generating about -0.02 per unit of risk. If you would invest  3,752  in ETC 6 Meridian on September 12, 2024 and sell it today you would lose (5.00) from holding ETC 6 Meridian or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

ETC 6 Meridian  vs.  Nicholas Global Equity

ETC 6 Meridian

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETC 6 Meridian are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, ETC 6 is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Nicholas Global Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nicholas Global Equity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Nicholas Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ETC 6 and Nicholas Global

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

The idea behind ETC 6 Meridian and Nicholas Global Equity 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.