Correlation Between Sit Small and Sit U
Can any of the company-specific risk be diversified away by investing in both Sit Small and Sit U 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 U 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 U S, you can compare the effects of market volatilities on Sit Small and Sit U 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 U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Sit U.
Diversification Opportunities for Sit Small and Sit U
Excellent diversification
The 3 months correlation between Sit and Sit is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit U S 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 U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit U S has no effect on the direction of Sit Small i.e., Sit Small and Sit U go up and down completely randomly.
Pair Corralation between Sit Small and Sit U
Assuming the 90 days horizon Sit Small Cap is expected to generate 5.95 times more return on investment than Sit U. However, Sit Small is 5.95 times more volatile than Sit U S. It trades about 0.12 of its potential returns per unit of risk. Sit U S is currently generating about 0.14 per unit of risk. If you would invest 7,119 in Sit Small Cap on August 30, 2024 and sell it today you would earn a total of 230.00 from holding Sit Small Cap or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Small Cap vs. Sit U S
Performance |
| Timeline |
| Sit Small Cap |
| Sit U S |
Sit Small and Sit U Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Sit U
The main advantage of trading using opposite Sit Small and Sit U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Sit U 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 U will offset losses from the drop in Sit U's long position.| Sit Small vs. Intermediate Term Tax Free Bond | Sit Small vs. Ishares Municipal Bond | Sit Small vs. Bbh Intermediate Municipal | Sit Small vs. Franklin High Yield |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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