Correlation Between Sit Small and Df Dent
Can any of the company-specific risk be diversified away by investing in both Sit Small and Df Dent 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 Df Dent 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 Df Dent Small, you can compare the effects of market volatilities on Sit Small and Df Dent 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 Df Dent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Df Dent.
Diversification Opportunities for Sit Small and Df Dent
Very poor diversification
The 3 months correlation between Sit and DFDSX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Df Dent Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Df Dent Small 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 Df Dent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Df Dent Small has no effect on the direction of Sit Small i.e., Sit Small and Df Dent go up and down completely randomly.
Pair Corralation between Sit Small and Df Dent
Assuming the 90 days horizon Sit Small is expected to generate 1.38 times less return on investment than Df Dent. But when comparing it to its historical volatility, Sit Small Cap is 1.02 times less risky than Df Dent. It trades about 0.04 of its potential returns per unit of risk. Df Dent Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,129 in Df Dent Small on September 12, 2024 and sell it today you would earn a total of 492.00 from holding Df Dent Small or generate 23.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.72% |
| Values | Daily Returns |
Sit Small Cap vs. Df Dent Small
Performance |
| Timeline |
| Sit Small Cap |
| Df Dent Small |
Sit Small and Df Dent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Df Dent
The main advantage of trading using opposite Sit Small and Df Dent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Df Dent 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 Df Dent will offset losses from the drop in Df Dent's long position.| Sit Small vs. Df Dent Small | Sit Small vs. Vy Columbia Small | Sit Small vs. Aqr Small Cap | Sit Small vs. Touchstone Small Cap |
| Df Dent vs. Valic Company I | Df Dent vs. Omni Small Cap Value | Df Dent vs. Ab Discovery Value | Df Dent vs. Boston Partners Small |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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