Correlation Between Value Line and Sit Balanced
Can any of the company-specific risk be diversified away by investing in both Value Line 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 Value Line and Sit Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Value Line Asset and Sit Balanced Fund, you can compare the effects of market volatilities on Value Line 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 Value Line with a short position of Sit Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Line and Sit Balanced.
Diversification Opportunities for Value Line and Sit Balanced
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Value and Sit is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Asset and Sit Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Balanced and Value Line 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 Value Line Asset 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 Value Line i.e., Value Line and Sit Balanced go up and down completely randomly.
Pair Corralation between Value Line and Sit Balanced
Assuming the 90 days horizon Value Line Asset is expected to generate 1.03 times more return on investment than Sit Balanced. However, Value Line is 1.03 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 0.11 per unit of risk. If you would invest 4,528 in Value Line Asset on August 26, 2024 and sell it today you would earn a total of 143.00 from holding Value Line Asset or generate 3.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Line Asset vs. Sit Balanced Fund
Performance |
| Timeline |
| Value Line Asset |
| Sit Balanced |
Value Line and Sit Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Line and Sit Balanced
The main advantage of trading using opposite Value Line and Sit Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value Line 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.| Value Line vs. Value Line Income | Value Line vs. Value Line Premier | Value Line vs. Value Line Mid | Value Line vs. Value Line Larger |
| 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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