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 Value Fund, 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
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Siit and Small is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Siit Emerging Markets and Small Cap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Value 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 Markets is expected to under-perform the Small Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Siit Emerging Markets is 2.82 times less risky than Small Cap. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Small Cap Value Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 3,969 in Small Cap Value Fund on September 1, 2024 and sell it today you would earn a total of 402.00 from holding Small Cap Value Fund or generate 10.13% 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 Value Fund
Performance |
| Timeline |
| Siit Emerging Markets |
| Small Cap Value |
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. Saat Market Growth | Siit Emerging vs. Simt Real Return | Siit Emerging vs. Simt Small Cap | Siit Emerging vs. Siit Screened World |
| Small Cap vs. Siit High Yield | Small Cap vs. Franklin High Income | Small Cap vs. T Rowe Price | Small Cap vs. Strategic Allocation Aggressive |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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