Correlation Between Sit Balanced and Sit U
Can any of the company-specific risk be diversified away by investing in both Sit Balanced and Sit U 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 Balanced and Sit U into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Balanced Fund and Sit U S, you can compare the effects of market volatilities on Sit Balanced and Sit U 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 Balanced with a short position of Sit U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Balanced and Sit U.
Diversification Opportunities for Sit Balanced and Sit U
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sit and Sit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sit Balanced Fund and Sit U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit U S and Sit Balanced 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 Balanced Fund are associated (or correlated) with Sit U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit U S has no effect on the direction of Sit Balanced i.e., Sit Balanced and Sit U go up and down completely randomly.
Pair Corralation between Sit Balanced and Sit U
Assuming the 90 days horizon Sit Balanced Fund is expected to under-perform the Sit U. In addition to that, Sit Balanced is 2.53 times more volatile than Sit U S. It trades about -0.06 of its total potential returns per unit of risk. Sit U S is currently generating about 0.29 per unit of volatility. If you would invest 1,017 in Sit U S on November 28, 2024 and sell it today you would earn a total of 14.00 from holding Sit U S or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Balanced Fund vs. Sit U S
Performance |
| Timeline |
| Sit Balanced |
| Sit U S |
Sit Balanced and Sit U Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Balanced and Sit U
The main advantage of trading using opposite Sit Balanced and Sit U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Balanced position performs unexpectedly, Sit U 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 U will offset losses from the drop in Sit U's long position.| Sit Balanced vs. Value Line Asset | Sit Balanced vs. Sit Large Cap | Sit Balanced vs. Sit Small Cap | Sit Balanced vs. Plumb Balanced Fund |
| Sit U vs. Tcw Total Return | Sit U vs. Ridgeworth Seix Government | Sit U vs. Short Duration Income | Sit U vs. Thompson Bond Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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