Correlation Between Sit Small and Sit Balanced
Can any of the company-specific risk be diversified away by investing in both Sit Small and Sit Balanced 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 Balanced 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 Balanced Fund, you can compare the effects of market volatilities on Sit Small and Sit Balanced 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 Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Sit Balanced.
Diversification Opportunities for Sit Small and Sit Balanced
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sit and Sit is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Balanced 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 Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Balanced has no effect on the direction of Sit Small i.e., Sit Small and Sit Balanced go up and down completely randomly.
Pair Corralation between Sit Small and Sit Balanced
Assuming the 90 days horizon Sit Small Cap is expected to generate 2.21 times more return on investment than Sit Balanced. However, Sit Small is 2.21 times more volatile than Sit Balanced Fund. It trades about 0.23 of its potential returns per unit of risk. Sit Balanced Fund is currently generating about 0.3 per unit of risk. If you would invest 6,961 in Sit Small Cap on September 1, 2024 and sell it today you would earn a total of 417.00 from holding Sit Small Cap or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Small Cap vs. Sit Balanced Fund
Performance |
| Timeline |
| Sit Small Cap |
| Sit Balanced |
Sit Small and Sit Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Sit Balanced
The main advantage of trading using opposite Sit Small and Sit Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Sit Balanced 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 Balanced will offset losses from the drop in Sit Balanced'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 |
| Sit Balanced vs. Value Line Asset | Sit Balanced vs. Sit Large Cap | Sit Balanced vs. Sit Small Cap | Sit Balanced vs. Plumb Balanced Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |