Correlation Between Sit Small and Sit Government
Can any of the company-specific risk be diversified away by investing in both Sit Small and Sit Government 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 Government 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 Government Securities, you can compare the effects of market volatilities on Sit Small and Sit Government 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 Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Sit Government.
Diversification Opportunities for Sit Small and Sit Government
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sit and Sit is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Government Securities 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 Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Government Securities has no effect on the direction of Sit Small i.e., Sit Small and Sit Government go up and down completely randomly.
Pair Corralation between Sit Small and Sit Government
Assuming the 90 days horizon Sit Small is expected to generate 2.42 times less return on investment than Sit Government. In addition to that, Sit Small is 4.45 times more volatile than Sit Government Securities. It trades about 0.01 of its total potential returns per unit of risk. Sit Government Securities is currently generating about 0.09 per unit of volatility. If you would invest 1,028 in Sit Government Securities on January 4, 2025 and sell it today you would earn a total of 6.00 from holding Sit Government Securities or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sit Small Cap vs. Sit Government Securities
Performance |
| Timeline |
| Sit Small Cap |
| Sit Government Securities |
Sit Small and Sit Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Sit Government
The main advantage of trading using opposite Sit Small and Sit Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Sit Government 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 Government will offset losses from the drop in Sit Government's long position.| Sit Small vs. Jennison Natural Resources | Sit Small vs. Hennessy Bp Energy | Sit Small vs. Transamerica Mlp Energy | Sit Small vs. Franklin Natural Resources |
| Sit Government vs. Morningstar Global Income | Sit Government vs. Ab Global Bond | Sit Government vs. Gmo Global Developed | Sit Government vs. Dws Global Macro |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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