Correlation Between California High-yield and Sit Global
Can any of the company-specific risk be diversified away by investing in both California High-yield and Sit 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 California High-yield and Sit Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Sit Global Dividend, you can compare the effects of market volatilities on California High-yield and Sit 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 California High-yield with a short position of Sit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High-yield and Sit Global.
Diversification Opportunities for California High-yield and Sit Global
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between California and Sit is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Sit Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Global Dividend and California High-yield 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 California High Yield Municipal are associated (or correlated) with Sit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Global Dividend has no effect on the direction of California High-yield i.e., California High-yield and Sit Global go up and down completely randomly.
Pair Corralation between California High-yield and Sit Global
Assuming the 90 days horizon California High-yield is expected to generate 2.44 times less return on investment than Sit Global. But when comparing it to its historical volatility, California High Yield Municipal is 1.79 times less risky than Sit Global. It trades about 0.19 of its potential returns per unit of risk. Sit Global Dividend is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,761 in Sit Global Dividend on September 1, 2024 and sell it today you would earn a total of 94.00 from holding Sit Global Dividend or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
California High Yield Municipa vs. Sit Global Dividend
Performance |
| Timeline |
| California High Yield |
| Sit Global Dividend |
California High-yield and Sit Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High-yield and Sit Global
The main advantage of trading using opposite California High-yield and Sit Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High-yield position performs unexpectedly, Sit 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 Sit Global will offset losses from the drop in Sit Global's long position.| California High-yield vs. Equity Growth Fund | California High-yield vs. Income Growth Fund | California High-yield vs. Diversified Bond Fund | California High-yield vs. Emerging Markets Fund |
| Sit Global vs. Sit Small Cap | Sit Global vs. Sit Global Dividend | Sit Global vs. Sit Small Cap | Sit Global vs. Sit Developing Markets |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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