Correlation Between Sit Emerging and United Kingdom
Can any of the company-specific risk be diversified away by investing in both Sit Emerging and United Kingdom 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 United Kingdom 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 United Kingdom Small, you can compare the effects of market volatilities on Sit Emerging and United Kingdom 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 United Kingdom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Emerging and United Kingdom.
Diversification Opportunities for Sit Emerging and United Kingdom
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sit and United is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sit Emerging Markets and United Kingdom Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Kingdom Small 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 United Kingdom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Kingdom Small has no effect on the direction of Sit Emerging i.e., Sit Emerging and United Kingdom go up and down completely randomly.
Pair Corralation between Sit Emerging and United Kingdom
Assuming the 90 days horizon Sit Emerging Markets is expected to generate 0.19 times more return on investment than United Kingdom. However, Sit Emerging Markets is 5.24 times less risky than United Kingdom. It trades about 0.15 of its potential returns per unit of risk. United Kingdom Small is currently generating about -0.02 per unit of risk. If you would invest 877.00 in Sit Emerging Markets on December 17, 2024 and sell it today you would earn a total of 6.00 from holding Sit Emerging Markets or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Emerging Markets vs. United Kingdom Small
Performance |
| Timeline |
| Sit Emerging Markets |
| United Kingdom Small |
Sit Emerging and United Kingdom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Emerging and United Kingdom
The main advantage of trading using opposite Sit Emerging and United Kingdom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Emerging position performs unexpectedly, United Kingdom 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 United Kingdom will offset losses from the drop in United Kingdom's long position.| Sit Emerging vs. Absolute Convertible Arbitrage | ||
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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