Correlation Between Sit Small and Sit Mid
Can any of the company-specific risk be diversified away by investing in both Sit Small and Sit Mid 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 Small and Sit Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Small Cap and Sit Mid Cap, you can compare the effects of market volatilities on Sit Small and Sit Mid 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 Small with a short position of Sit Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Sit Mid.
Diversification Opportunities for Sit Small and Sit Mid
Almost no diversification
The 3 months correlation between Sit and Sit is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Mid Cap and Sit Small 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 Small Cap are associated (or correlated) with Sit Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Mid Cap has no effect on the direction of Sit Small i.e., Sit Small and Sit Mid go up and down completely randomly.
Pair Corralation between Sit Small and Sit Mid
Assuming the 90 days horizon Sit Small Cap is expected to generate 1.08 times more return on investment than Sit Mid. However, Sit Small is 1.08 times more volatile than Sit Mid Cap. It trades about 0.07 of its potential returns per unit of risk. Sit Mid Cap is currently generating about 0.06 per unit of risk. If you would invest 1,325 in Sit Small Cap on August 26, 2024 and sell it today you would earn a total of 538.00 from holding Sit Small Cap or generate 40.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Small Cap vs. Sit Mid Cap
Performance |
| Timeline |
| Sit Small Cap |
| Sit Mid Cap |
Sit Small and Sit Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Sit Mid
The main advantage of trading using opposite Sit Small and Sit Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Sit Mid 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 Sit Mid will offset losses from the drop in Sit Mid's long position.| Sit Small vs. Sit Global Dividend | Sit Small vs. Sit Global Dividend | Sit Small vs. Sit Small Cap | Sit Small vs. Sit Developing Markets |
| Sit Mid vs. Invesco Global Health | Sit Mid vs. Highland Longshort Healthcare | Sit Mid vs. Lord Abbett Health | Sit Mid vs. Blackrock Health Sciences |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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