Correlation Between Small Cap and Siit Core
Can any of the company-specific risk be diversified away by investing in both Small Cap and Siit Core 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 Small Cap and Siit Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Siit E Fixed, you can compare the effects of market volatilities on Small Cap and Siit Core 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 Small Cap with a short position of Siit Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Siit Core.
Diversification Opportunities for Small Cap and Siit Core
Excellent diversification
The 3 months correlation between Small and Siit is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Siit E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit E Fixed and Small Cap 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 Small Cap Stock are associated (or correlated) with Siit Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit E Fixed has no effect on the direction of Small Cap i.e., Small Cap and Siit Core go up and down completely randomly.
Pair Corralation between Small Cap and Siit Core
Assuming the 90 days horizon Small Cap Stock is expected to generate 3.85 times more return on investment than Siit Core. However, Small Cap is 3.85 times more volatile than Siit E Fixed. It trades about 0.08 of its potential returns per unit of risk. Siit E Fixed is currently generating about 0.09 per unit of risk. If you would invest 1,338 in Small Cap Stock on September 1, 2024 and sell it today you would earn a total of 187.00 from holding Small Cap Stock or generate 13.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Small Cap Stock vs. Siit E Fixed
Performance |
| Timeline |
| Small Cap Stock |
| Siit E Fixed |
Small Cap and Siit Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Siit Core
The main advantage of trading using opposite Small Cap and Siit Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Siit Core 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 Siit Core will offset losses from the drop in Siit Core's long position.| Small Cap vs. Western Asset High | Small Cap vs. Needham Aggressive Growth | Small Cap vs. T Rowe Price | Small Cap vs. California High Yield Municipal |
| Siit Core vs. Federated Global Allocation | Siit Core vs. Morgan Stanley Global | Siit Core vs. Wisdomtree Siegel Global | Siit Core vs. Scharf Global Opportunity |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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