Correlation Between National Tax and Sit Small
Can any of the company-specific risk be diversified away by investing in both National Tax and Sit Small 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 National Tax and Sit Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The National Tax Free and Sit Small Cap, you can compare the effects of market volatilities on National Tax and Sit Small 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 National Tax with a short position of Sit Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Tax and Sit Small.
Diversification Opportunities for National Tax and Sit Small
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Sit is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Sit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Small Cap and National Tax 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 The National Tax Free are associated (or correlated) with Sit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Small Cap has no effect on the direction of National Tax i.e., National Tax and Sit Small go up and down completely randomly.
Pair Corralation between National Tax and Sit Small
Assuming the 90 days horizon The National Tax Free is expected to generate 0.1 times more return on investment than Sit Small. However, The National Tax Free is 9.65 times less risky than Sit Small. It trades about 0.6 of its potential returns per unit of risk. Sit Small Cap is currently generating about -0.2 per unit of risk. If you would invest 1,863 in The National Tax Free on September 12, 2024 and sell it today you would earn a total of 21.00 from holding The National Tax Free or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The National Tax Free vs. Sit Small Cap
Performance |
| Timeline |
| National Tax |
| Sit Small Cap |
National Tax and Sit Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Tax and Sit Small
The main advantage of trading using opposite National Tax and Sit Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Tax position performs unexpectedly, Sit Small 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 Small will offset losses from the drop in Sit Small's long position.| National Tax vs. Tax Exempt Bond | National Tax vs. Blackrock National Municipal | National Tax vs. SCOR PK | National Tax vs. Morningstar Unconstrained Allocation |
| Sit Small vs. Franklin Federal Limited Term | Sit Small vs. Touchstone Ultra Short | Sit Small vs. Astor Longshort Fund | Sit Small vs. Old Westbury Short Term |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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