Correlation Between Multisector Bond and Sit Small
Can any of the company-specific risk be diversified away by investing in both Multisector Bond 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 Multisector Bond and Sit Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Sit Small Cap, you can compare the effects of market volatilities on Multisector Bond 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 Multisector Bond with a short position of Sit Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Sit Small.
Diversification Opportunities for Multisector Bond and Sit Small
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Multisector and Sit is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma 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 Multisector Bond 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 Multisector Bond Sma 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 Multisector Bond i.e., Multisector Bond and Sit Small go up and down completely randomly.
Pair Corralation between Multisector Bond and Sit Small
Assuming the 90 days horizon Multisector Bond Sma is expected to generate 0.25 times more return on investment than Sit Small. However, Multisector Bond Sma is 3.96 times less risky than Sit Small. It trades about 0.18 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 1,365 in Multisector Bond Sma on September 12, 2024 and sell it today you would earn a total of 11.00 from holding Multisector Bond Sma or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Sit Small Cap
Performance |
| Timeline |
| Multisector Bond Sma |
| Sit Small Cap |
Multisector Bond and Sit Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Sit Small
The main advantage of trading using opposite Multisector Bond and Sit Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond 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.| Multisector Bond vs. SCOR PK | Multisector Bond vs. Morningstar Unconstrained Allocation | Multisector Bond vs. Thrivent High Yield | Multisector Bond vs. Via Renewables |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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