Correlation Between Gmo High and Six Circles
Can any of the company-specific risk be diversified away by investing in both Gmo High and Six Circles 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 Gmo High and Six Circles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Six Circles Credit, you can compare the effects of market volatilities on Gmo High and Six Circles 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 Gmo High with a short position of Six Circles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Six Circles.
Diversification Opportunities for Gmo High and Six Circles
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gmo and Six is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Six Circles Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Six Circles Credit and Gmo High 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 Gmo High Yield are associated (or correlated) with Six Circles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Six Circles Credit has no effect on the direction of Gmo High i.e., Gmo High and Six Circles go up and down completely randomly.
Pair Corralation between Gmo High and Six Circles
Assuming the 90 days horizon Gmo High Yield is expected to generate 1.2 times more return on investment than Six Circles. However, Gmo High is 1.2 times more volatile than Six Circles Credit. It trades about 0.36 of its potential returns per unit of risk. Six Circles Credit is currently generating about 0.4 per unit of risk. If you would invest 1,724 in Gmo High Yield on June 1, 2025 and sell it today you would earn a total of 57.00 from holding Gmo High Yield or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Six Circles Credit
Performance |
| Timeline |
| Gmo High Yield |
| Six Circles Credit |
Gmo High and Six Circles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Six Circles
The main advantage of trading using opposite Gmo High and Six Circles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Six Circles 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 Six Circles will offset losses from the drop in Six Circles' long position.| Gmo High vs. Scout E Bond | Gmo High vs. Gmo E Plus | Gmo High vs. Pioneer High Yield | Gmo High vs. T Rowe Price |
| Six Circles vs. Hennessy Technology Fund | Six Circles vs. Dreyfus Technology Growth | Six Circles vs. Franklin Biotechnology Discovery | Six Circles vs. Allianzgi Technology Fund |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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