Correlation Between Simt Small and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both Simt 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 Simt 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 Simt Small Cap and Sit Emerging Markets, you can compare the effects of market volatilities on Simt 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 Simt Small with a short position of Sit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Small and Sit Emerging.
Diversification Opportunities for Simt Small and Sit Emerging
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Simt and Sit is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Simt 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 Simt 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 Simt 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 Simt Small i.e., Simt Small and Sit Emerging go up and down completely randomly.
Pair Corralation between Simt Small and Sit Emerging
Assuming the 90 days horizon Simt Small Cap is expected to generate 2.07 times more return on investment than Sit Emerging. However, Simt Small is 2.07 times more volatile than Sit Emerging Markets. It trades about 0.34 of its potential returns per unit of risk. Sit Emerging Markets is currently generating about -0.15 per unit of risk. If you would invest 3,717 in Simt Small Cap on September 1, 2024 and sell it today you would earn a total of 429.00 from holding Simt Small Cap or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Simt Small Cap vs. Sit Emerging Markets
Performance |
| Timeline |
| Simt Small Cap |
| Sit Emerging Markets |
Simt Small and Sit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Small and Sit Emerging
The main advantage of trading using opposite Simt Small and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt 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.| Simt Small vs. Old Westbury Large | Simt Small vs. Aqr Large Cap | Simt Small vs. Pace Large Growth | Simt Small vs. Morningstar Unconstrained Allocation |
| Sit Emerging vs. Saat Market Growth | Sit Emerging vs. Simt Real Return | Sit Emerging vs. Simt Small Cap | Sit Emerging vs. Siit Screened World |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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