Correlation Between Sit Small and Sit Tax
Can any of the company-specific risk be diversified away by investing in both Sit Small and Sit Tax 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 Tax 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 Tax Free Income, you can compare the effects of market volatilities on Sit Small and Sit Tax 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 Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Small and Sit Tax.
Diversification Opportunities for Sit Small and Sit Tax
Very weak diversification
The 3 months correlation between Sit and Sit is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Tax Free 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 Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Tax Free has no effect on the direction of Sit Small i.e., Sit Small and Sit Tax go up and down completely randomly.
Pair Corralation between Sit Small and Sit Tax
Assuming the 90 days horizon Sit Small Cap is expected to generate 3.25 times more return on investment than Sit Tax. However, Sit Small is 3.25 times more volatile than Sit Tax Free Income. It trades about 0.26 of its potential returns per unit of risk. Sit Tax Free Income is currently generating about 0.06 per unit of risk. If you would invest 6,563 in Sit Small Cap on October 20, 2024 and sell it today you would earn a total of 303.00 from holding Sit Small Cap or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Small Cap vs. Sit Tax Free Income
Performance |
| Timeline |
| Sit Small Cap |
| Sit Tax Free |
Sit Small and Sit Tax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Small and Sit Tax
The main advantage of trading using opposite Sit Small and Sit Tax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Small position performs unexpectedly, Sit Tax 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 Tax will offset losses from the drop in Sit Tax's long position.| Sit Small vs. Transamerica Large Cap | Sit Small vs. Vest Large Cap | Sit Small vs. Qs Large Cap | Sit Small vs. Fisher Large Cap |
| Sit Tax vs. Prudential Government Money | Sit Tax vs. Short Term Government Fund | Sit Tax vs. Short Term Government Fund | Sit Tax vs. Elfun Government Money |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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