Correlation Between Sit Balanced and Sit Quality
Can any of the company-specific risk be diversified away by investing in both Sit Balanced and Sit Quality 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 Quality 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 Quality Income, you can compare the effects of market volatilities on Sit Balanced and Sit Quality 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 Quality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Balanced and Sit Quality.
Diversification Opportunities for Sit Balanced and Sit Quality
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SIT and Sit is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sit Balanced Fund and Sit Quality Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Quality Income 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 Quality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Quality Income has no effect on the direction of Sit Balanced i.e., Sit Balanced and Sit Quality go up and down completely randomly.
Pair Corralation between Sit Balanced and Sit Quality
Assuming the 90 days horizon Sit Balanced Fund is expected to generate 3.3 times more return on investment than Sit Quality. However, Sit Balanced is 3.3 times more volatile than Sit Quality Income. It trades about 0.11 of its potential returns per unit of risk. Sit Quality Income is currently generating about 0.07 per unit of risk. If you would invest 2,538 in Sit Balanced Fund on August 30, 2024 and sell it today you would earn a total of 1,058 from holding Sit Balanced Fund or generate 41.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Balanced Fund vs. Sit Quality Income
Performance |
| Timeline |
| Sit Balanced |
| Sit Quality Income |
Sit Balanced and Sit Quality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Balanced and Sit Quality
The main advantage of trading using opposite Sit Balanced and Sit Quality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Balanced position performs unexpectedly, Sit Quality 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 Quality will offset losses from the drop in Sit Quality'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 Quality vs. Guggenheim Diversified Income | Sit Quality vs. Vanguard Strategic Small Cap | Sit Quality vs. Davenport Small Cap | Sit Quality vs. Tax Managed Mid Small |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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