Correlation Between Sit Small and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Sit Small and Midcap Fund 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 Midcap Fund 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 Midcap Fund Class, you can compare the effects of market volatilities on Sit Small and Midcap Fund 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 Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Midcap Fund.
Diversification Opportunities for Sit Small and Midcap Fund
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sit and Midcap is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Midcap Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund Class 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 Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund Class has no effect on the direction of Sit Small i.e., Sit Small and Midcap Fund go up and down completely randomly.
Pair Corralation between Sit Small and Midcap Fund
Assuming the 90 days horizon Sit Small is expected to generate 1.52 times less return on investment than Midcap Fund. In addition to that, Sit Small is 1.28 times more volatile than Midcap Fund Class. It trades about 0.23 of its total potential returns per unit of risk. Midcap Fund Class is currently generating about 0.44 per unit of volatility. If you would invest 4,352 in Midcap Fund Class on September 1, 2024 and sell it today you would earn a total of 389.00 from holding Midcap Fund Class or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sit Small Cap vs. Midcap Fund Class
Performance |
| Timeline |
| Sit Small Cap |
| Midcap Fund Class |
Sit Small and Midcap Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Midcap Fund
The main advantage of trading using opposite Sit Small and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Midcap Fund 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 Midcap Fund will offset losses from the drop in Midcap Fund's long position.| Sit Small vs. Sit Small Cap | Sit Small vs. Sit Global Dividend | Sit Small vs. Sit Global Dividend | Sit Small vs. Sit Small Cap |
| Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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