Correlation Between College Retirement and Sit Minnesota
Can any of the company-specific risk be diversified away by investing in both College Retirement and Sit Minnesota 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 College Retirement and Sit Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between College Retirement Equities and Sit Minnesota Tax Free, you can compare the effects of market volatilities on College Retirement and Sit Minnesota 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 College Retirement with a short position of Sit Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of College Retirement and Sit Minnesota.
Diversification Opportunities for College Retirement and Sit Minnesota
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between College and Sit is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding College Retirement Equities and Sit Minnesota Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Minnesota Tax and College Retirement 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 College Retirement Equities are associated (or correlated) with Sit Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Minnesota Tax has no effect on the direction of College Retirement i.e., College Retirement and Sit Minnesota go up and down completely randomly.
Pair Corralation between College Retirement and Sit Minnesota
Assuming the 90 days trading horizon College Retirement Equities is expected to generate 3.3 times more return on investment than Sit Minnesota. However, College Retirement is 3.3 times more volatile than Sit Minnesota Tax Free. It trades about 0.1 of its potential returns per unit of risk. Sit Minnesota Tax Free is currently generating about 0.04 per unit of risk. If you would invest 34,839 in College Retirement Equities on October 22, 2024 and sell it today you would earn a total of 16,755 from holding College Retirement Equities or generate 48.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
College Retirement Equities vs. Sit Minnesota Tax Free
Performance |
| Timeline |
| College Retirement |
| Sit Minnesota Tax |
College Retirement and Sit Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with College Retirement and Sit Minnesota
The main advantage of trading using opposite College Retirement and Sit Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if College Retirement position performs unexpectedly, Sit Minnesota 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 Minnesota will offset losses from the drop in Sit Minnesota's long position.| College Retirement vs. Ambrus Core Bond | College Retirement vs. Maryland Tax Free Bond | College Retirement vs. Alliancebernstein Bond | College Retirement vs. Rbc Ultra Short Fixed |
| Sit Minnesota vs. Nuveen Strategic Municipal | Sit Minnesota vs. Access Capital Munity | Sit Minnesota vs. American High Income Municipal | Sit Minnesota vs. Alpine Ultra Short |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Transaction History View history of all your transactions and understand their impact on performance |