Correlation Between Lifestyle and Sit Developing
Can any of the company-specific risk be diversified away by investing in both Lifestyle and Sit Developing 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 Lifestyle and Sit Developing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lifestyle Ii Moderate and Sit Developing Markets, you can compare the effects of market volatilities on Lifestyle and Sit Developing 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 Lifestyle with a short position of Sit Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lifestyle and Sit Developing.
Diversification Opportunities for Lifestyle and Sit Developing
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lifestyle and Sit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lifestyle Ii Moderate and Sit Developing Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Developing Markets and Lifestyle 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 Lifestyle Ii Moderate are associated (or correlated) with Sit Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Developing Markets has no effect on the direction of Lifestyle i.e., Lifestyle and Sit Developing go up and down completely randomly.
Pair Corralation between Lifestyle and Sit Developing
Assuming the 90 days horizon Lifestyle Ii Moderate is expected to generate 0.36 times more return on investment than Sit Developing. However, Lifestyle Ii Moderate is 2.8 times less risky than Sit Developing. It trades about 0.35 of its potential returns per unit of risk. Sit Developing Markets is currently generating about -0.06 per unit of risk. If you would invest 1,096 in Lifestyle Ii Moderate on September 1, 2024 and sell it today you would earn a total of 27.00 from holding Lifestyle Ii Moderate or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lifestyle Ii Moderate vs. Sit Developing Markets
Performance |
| Timeline |
| Lifestyle Ii Moderate |
| Sit Developing Markets |
Lifestyle and Sit Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lifestyle and Sit Developing
The main advantage of trading using opposite Lifestyle and Sit Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lifestyle position performs unexpectedly, Sit Developing 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 Developing will offset losses from the drop in Sit Developing's long position.| Lifestyle vs. Balanced Fund Investor | Lifestyle vs. T Rowe Price | Lifestyle vs. Fa 529 Aggressive | Lifestyle vs. Western Asset Municipal |
| Sit Developing vs. Sit Small Cap | Sit Developing vs. Sit Global Dividend | Sit Developing vs. Sit Global Dividend | Sit Developing vs. Sit Small Cap |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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