Correlation Between Small Cap and Sit Small
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Sit Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Sit Small Cap, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Sit Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Sit Small.
Diversification Opportunities for Small Cap and Sit Small
Almost no diversification
The 3 months correlation between Small and Sit is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity 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 Small Cap 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 Small Cap Equity 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 Small Cap i.e., Small Cap and Sit Small go up and down completely randomly.
Pair Corralation between Small Cap and Sit Small
Assuming the 90 days horizon Small Cap is expected to generate 1.1 times less return on investment than Sit Small. But when comparing it to its historical volatility, Small Cap Equity is 1.02 times less risky than Sit Small. It trades about 0.28 of its potential returns per unit of risk. Sit Small Cap is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,709 in Sit Small Cap on October 24, 2024 and sell it today you would earn a total of 105.00 from holding Sit Small Cap or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.74% |
| Values | Daily Returns |
Small Cap Equity vs. Sit Small Cap
Performance |
| Timeline |
| Small Cap Equity |
| Sit Small Cap |
Small Cap and Sit Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Sit Small
The main advantage of trading using opposite Small Cap and Sit Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Growth Fund Of | Small Cap vs. Rbb Fund | Small Cap vs. Victory Incore Fund | Small Cap vs. T Rowe Price |
| Sit Small vs. T Rowe Price | Sit Small vs. Siit Equity Factor | Sit Small vs. Small Cap Equity | Sit Small vs. Rbc Global Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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