Correlation Between Global Gold and Sit International

Can any of the company-specific risk be diversified away by investing in both Global Gold and Sit International 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 Global Gold and Sit International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Gold Fund and Sit International Growth, you can compare the effects of market volatilities on Global Gold and Sit International 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 Global Gold with a short position of Sit International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and Sit International.

Diversification Opportunities for Global Gold and Sit International

0.65

Correlation Coefficient

Global Gold  Sit International

Poor diversification

The 3 months correlation between Global and Sit is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and Sit International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit International Growth and Global Gold 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 Global Gold Fund are associated (or correlated) with Sit International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit International Growth has no effect on the direction of Global Gold i.e., Global Gold and Sit International go up and down completely randomly.

Pair Corralation between Global Gold and Sit International

Assuming the 90 days horizon Global Gold Fund is expected to generate 2.14 times more return on investment than Sit International. However, Global Gold is 2.14 times more volatile than Sit International Growth. It trades about 0.02 of its potential returns per unit of risk. Sit International Growth is currently generating about 0.04 per unit of risk. If you would invest  1,078  in Global Gold Fund on October 11, 2024 and sell it today you would earn a total of  157.00  from holding Global Gold Fund or generate 14.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Global Gold Fund  vs.  Sit International Growth

Global Gold Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Gold Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Sit International Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sit International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sit International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Gold and Sit International

The main advantage of trading using opposite Global Gold and Sit International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, Sit International 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 International will offset losses from the drop in Sit International's long position.

The idea behind Global Gold Fund and Sit International Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.