Correlation Between Sit Small and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both Sit Small and Sit Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Sit Small and Sit Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Sit Emerging.
Diversification Opportunities for Sit Small and Sit Emerging
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sit and Sit is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Emerging Markets has no effect on the direction of Sit Small i.e., Sit Small and Sit Emerging go up and down completely randomly.
Pair Corralation between Sit Small and Sit Emerging
Assuming the 90 days horizon Sit Small Cap is expected to generate 1.33 times more return on investment than Sit Emerging. However, Sit Small is 1.33 times more volatile than Sit Emerging Markets. It trades about 0.07 of its potential returns per unit of risk. Sit Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 1,332 in Sit Small Cap on September 3, 2024 and sell it today you would earn a total of 538.00 from holding Sit Small Cap or generate 40.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Small Cap vs. Sit Emerging Markets
Performance |
| Timeline |
| Sit Small Cap |
| Sit Emerging Markets |
Sit Small and Sit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Sit Emerging
The main advantage of trading using opposite Sit Small and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Sit Emerging 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 Emerging will offset losses from the drop in Sit Emerging's long position.| Sit Small vs. Vanguard Small Cap Index | Sit Small vs. Vanguard Small Cap Index | Sit Small vs. Vanguard Small Cap Index | Sit Small vs. Vanguard Small Cap Index |
| Sit Emerging vs. Sit Emerging Markets | Sit Emerging vs. Sit Small Cap | Sit Emerging vs. Sit Global Dividend | Sit Emerging vs. Sit Global Dividend |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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