Correlation Between Sit Emerging and Sit International
Can any of the company-specific risk be diversified away by investing in both Sit Emerging and Sit International 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 Emerging and Sit International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Emerging Markets and Sit International Equity, you can compare the effects of market volatilities on Sit Emerging and Sit International 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 Emerging with a short position of Sit International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Emerging and Sit International.
Diversification Opportunities for Sit Emerging and Sit International
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sit and Sit is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sit Emerging Markets and Sit International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit International Equity and Sit Emerging 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 Emerging Markets are associated (or correlated) with Sit International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit International Equity has no effect on the direction of Sit Emerging i.e., Sit Emerging and Sit International go up and down completely randomly.
Pair Corralation between Sit Emerging and Sit International
Assuming the 90 days horizon Sit Emerging Markets is expected to generate 1.25 times more return on investment than Sit International. However, Sit Emerging is 1.25 times more volatile than Sit International Equity. It trades about 0.01 of its potential returns per unit of risk. Sit International Equity is currently generating about -0.09 per unit of risk. If you would invest 1,135 in Sit Emerging Markets on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Sit Emerging Markets or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Sit Emerging Markets vs. Sit International Equity
Performance |
| Timeline |
| Sit Emerging Markets |
| Sit International Equity |
Sit Emerging and Sit International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Emerging and Sit International
The main advantage of trading using opposite Sit Emerging and Sit International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Emerging position performs unexpectedly, Sit International 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 International will offset losses from the drop in Sit International's long position.| Sit Emerging vs. Wisdomtree Siegel Global | Sit Emerging vs. Mirova Global Green | Sit Emerging vs. Scharf Global Opportunity | Sit Emerging vs. Ab Global Risk |
| Sit International vs. Queens Road Small | Sit International vs. Hennessy Nerstone Mid | Sit International vs. Heartland Value Plus | Sit International vs. Fpa Queens Road |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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