Correlation Between Siit Emerging and Small Cap
Can any of the company-specific risk be diversified away by investing in both Siit Emerging and Small Cap 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 Siit Emerging and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siit Emerging Markets and Small Cap Growth, you can compare the effects of market volatilities on Siit Emerging and Small Cap 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 Siit Emerging with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siit Emerging and Small Cap.
Diversification Opportunities for Siit Emerging and Small Cap
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Siit and Small is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Siit Emerging Markets and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth and Siit 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 Siit Emerging Markets are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Siit Emerging i.e., Siit Emerging and Small Cap go up and down completely randomly.
Pair Corralation between Siit Emerging and Small Cap
Assuming the 90 days horizon Siit Emerging is expected to generate 1.36 times less return on investment than Small Cap. But when comparing it to its historical volatility, Siit Emerging Markets is 1.52 times less risky than Small Cap. It trades about 0.08 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,532 in Small Cap Growth on September 12, 2024 and sell it today you would earn a total of 448.00 from holding Small Cap Growth or generate 29.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siit Emerging Markets vs. Small Cap Growth
Performance |
| Timeline |
| Siit Emerging Markets |
| Small Cap Growth |
Siit Emerging and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siit Emerging and Small Cap
The main advantage of trading using opposite Siit Emerging and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siit Emerging position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Siit Emerging vs. American Funds New | Siit Emerging vs. SCOR PK | Siit Emerging vs. Morningstar Unconstrained Allocation | Siit Emerging vs. Via Renewables |
| Small Cap vs. Investec Emerging Markets | Small Cap vs. Franklin Emerging Market | Small Cap vs. Siit Emerging Markets | Small Cap vs. Nasdaq 100 2x Strategy |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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