Correlation Between Sit Government and First Trust
Can any of the company-specific risk be diversified away by investing in both Sit Government and First Trust 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 Government and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Government Securities and First Trust Preferred, you can compare the effects of market volatilities on Sit Government and First Trust 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 Government with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Government and First Trust.
Diversification Opportunities for Sit Government and First Trust
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sit and First is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and First Trust Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Preferred and Sit Government 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 Government Securities are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Preferred has no effect on the direction of Sit Government i.e., Sit Government and First Trust go up and down completely randomly.
Pair Corralation between Sit Government and First Trust
Assuming the 90 days horizon Sit Government is expected to generate 2.4 times less return on investment than First Trust. In addition to that, Sit Government is 1.16 times more volatile than First Trust Preferred. It trades about 0.09 of its total potential returns per unit of risk. First Trust Preferred is currently generating about 0.25 per unit of volatility. If you would invest 1,676 in First Trust Preferred on September 12, 2024 and sell it today you would earn a total of 333.00 from holding First Trust Preferred or generate 19.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Government Securities vs. First Trust Preferred
Performance |
| Timeline |
| Sit Government Securities |
| First Trust Preferred |
Sit Government and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Government and First Trust
The main advantage of trading using opposite Sit Government and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Government position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Sit Government vs. SCOR PK | Sit Government vs. Morningstar Unconstrained Allocation | Sit Government vs. Via Renewables | Sit Government vs. Bondbloxx ETF Trust |
| First Trust vs. Prudential Government Income | First Trust vs. Goldman Sachs Government | First Trust vs. Sit Government Securities | First Trust vs. Intermediate Government Bond |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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