Correlation Between Sit International and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both Sit International 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 Sit International and Sit Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit International Equity and Sit Emerging Markets, you can compare the effects of market volatilities on Sit International 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 Sit International with a short position of Sit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit International and Sit Emerging.
Diversification Opportunities for Sit International and Sit Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sit and Sit is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Sit International Equity 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 Sit International 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 Sit International Equity 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 Sit International i.e., Sit International and Sit Emerging go up and down completely randomly.
Pair Corralation between Sit International and Sit Emerging
Assuming the 90 days horizon Sit International Equity is expected to generate 0.89 times more return on investment than Sit Emerging. However, Sit International Equity is 1.12 times less risky than Sit Emerging. It trades about -0.24 of its potential returns per unit of risk. Sit Emerging Markets is currently generating about -0.22 per unit of risk. If you would invest 1,294 in Sit International Equity on August 29, 2024 and sell it today you would lose (47.00) from holding Sit International Equity or give up 3.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit International Equity vs. Sit Emerging Markets
Performance |
| Timeline |
| Sit International Equity |
| Sit Emerging Markets |
Sit International and Sit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit International and Sit Emerging
The main advantage of trading using opposite Sit International and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit International 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.| Sit International vs. Sit Emerging Markets | Sit International vs. Simt E Fixed | Sit International vs. Simt Multi Asset Income | Sit International vs. Simt Global Managed |
| Sit Emerging vs. Vanguard Emerging Markets | Sit Emerging vs. Vanguard Emerging Markets | Sit Emerging vs. HUMANA INC | Sit Emerging vs. Aquagold International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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