Correlation Between Sit Tax-free and The Fixed
Can any of the company-specific risk be diversified away by investing in both Sit Tax-free and The Fixed 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 Tax-free and The Fixed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Tax Free Income and The Fixed Income, you can compare the effects of market volatilities on Sit Tax-free and The Fixed 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 Tax-free with a short position of The Fixed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Tax-free and The Fixed.
Diversification Opportunities for Sit Tax-free and The Fixed
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sit and THE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sit Tax Free Income and The Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fixed Income and Sit Tax-free 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 Tax Free Income are associated (or correlated) with The Fixed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fixed Income has no effect on the direction of Sit Tax-free i.e., Sit Tax-free and The Fixed go up and down completely randomly.
Pair Corralation between Sit Tax-free and The Fixed
Assuming the 90 days horizon Sit Tax Free Income is expected to generate 0.77 times more return on investment than The Fixed. However, Sit Tax Free Income is 1.29 times less risky than The Fixed. It trades about 0.16 of its potential returns per unit of risk. The Fixed Income is currently generating about 0.12 per unit of risk. If you would invest 848.00 in Sit Tax Free Income on September 5, 2024 and sell it today you would earn a total of 43.00 from holding Sit Tax Free Income or generate 5.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Sit Tax Free Income vs. The Fixed Income
Performance |
| Timeline |
| Sit Tax Free |
| Fixed Income |
Sit Tax-free and The Fixed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Tax-free and The Fixed
The main advantage of trading using opposite Sit Tax-free and The Fixed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Tax-free position performs unexpectedly, The Fixed 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 The Fixed will offset losses from the drop in The Fixed's long position.| Sit Tax-free vs. Western Asset Municipal | Sit Tax-free vs. Iaadx | Sit Tax-free vs. Materials Portfolio Fidelity | Sit Tax-free vs. Balanced Fund Investor |
| The Fixed vs. Vanguard Total Stock | The Fixed vs. Vanguard 500 Index | The Fixed vs. Vanguard Total Stock | The Fixed vs. Vanguard Total Stock |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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