Correlation Between United Kingdom and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both United Kingdom and Sit Emerging 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 United Kingdom and Sit Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Kingdom Small and Sit Emerging Markets, you can compare the effects of market volatilities on United Kingdom and Sit Emerging 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 United Kingdom with a short position of Sit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Kingdom and Sit Emerging.
Diversification Opportunities for United Kingdom and Sit Emerging
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Sit is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding United Kingdom Small and Sit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Emerging Markets and United Kingdom 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 United Kingdom Small are associated (or correlated) with Sit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Emerging Markets has no effect on the direction of United Kingdom i.e., United Kingdom and Sit Emerging go up and down completely randomly.
Pair Corralation between United Kingdom and Sit Emerging
Assuming the 90 days horizon United Kingdom Small is expected to under-perform the Sit Emerging. In addition to that, United Kingdom is 5.5 times more volatile than Sit Emerging Markets. It trades about -0.1 of its total potential returns per unit of risk. Sit Emerging Markets is currently generating about 0.12 per unit of volatility. If you would invest 878.00 in Sit Emerging Markets on December 16, 2024 and sell it today you would earn a total of 5.00 from holding Sit Emerging Markets or generate 0.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Kingdom Small vs. Sit Emerging Markets
Performance |
| Timeline |
| United Kingdom Small |
| Sit Emerging Markets |
United Kingdom and Sit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Kingdom and Sit Emerging
The main advantage of trading using opposite United Kingdom and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Kingdom position performs unexpectedly, Sit Emerging 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 Emerging will offset losses from the drop in Sit Emerging's long position.| United Kingdom vs. Energy Basic Materials | ||
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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