Correlation Between Sit Tax-free and Vanguard Intermediate
Can any of the company-specific risk be diversified away by investing in both Sit Tax-free and Vanguard Intermediate 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 Vanguard Intermediate 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 Vanguard Intermediate Term Tax Exempt, you can compare the effects of market volatilities on Sit Tax-free and Vanguard Intermediate 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 Vanguard Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Tax-free and Vanguard Intermediate.
Diversification Opportunities for Sit Tax-free and Vanguard Intermediate
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sit and Vanguard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Sit Tax Free Income and Vanguard Intermediate Term Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate 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 Vanguard Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate has no effect on the direction of Sit Tax-free i.e., Sit Tax-free and Vanguard Intermediate go up and down completely randomly.
Pair Corralation between Sit Tax-free and Vanguard Intermediate
Assuming the 90 days horizon Sit Tax Free Income is expected to generate 1.41 times more return on investment than Vanguard Intermediate. However, Sit Tax-free is 1.41 times more volatile than Vanguard Intermediate Term Tax Exempt. It trades about 0.17 of its potential returns per unit of risk. Vanguard Intermediate Term Tax Exempt is currently generating about 0.16 per unit of risk. If you would invest 840.00 in Sit Tax Free Income on September 1, 2024 and sell it today you would earn a total of 47.00 from holding Sit Tax Free Income or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Sit Tax Free Income vs. Vanguard Intermediate Term Tax
Performance |
| Timeline |
| Sit Tax Free |
| Vanguard Intermediate |
Sit Tax-free and Vanguard Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Tax-free and Vanguard Intermediate
The main advantage of trading using opposite Sit Tax-free and Vanguard Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Tax-free position performs unexpectedly, Vanguard Intermediate 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 Vanguard Intermediate will offset losses from the drop in Vanguard Intermediate's long position.| Sit Tax-free vs. Kinetics Small Cap | Sit Tax-free vs. Vanguard Growth And | Sit Tax-free vs. T Rowe Price | Sit Tax-free vs. Growth Opportunities Fund |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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