Correlation Between Mesirow Financial and Siit Emerging

Can any of the company-specific risk be diversified away by investing in both Mesirow Financial and Siit Emerging 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 Mesirow Financial and Siit Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mesirow Financial Small and Siit Emerging Markets, you can compare the effects of market volatilities on Mesirow Financial and Siit Emerging 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 Mesirow Financial with a short position of Siit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesirow Financial and Siit Emerging.

Diversification Opportunities for Mesirow Financial and Siit Emerging

0.65

Correlation Coefficient

Mesirow Financial  Siit Emerging

Poor diversification

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

Pair Corralation between Mesirow Financial and Siit Emerging

Assuming the 90 days horizon Mesirow Financial is expected to generate 1.34 times less return on investment than Siit Emerging. In addition to that, Mesirow Financial is 1.59 times more volatile than Siit Emerging Markets. It trades about 0.03 of its total potential returns per unit of risk. Siit Emerging Markets is currently generating about 0.07 per unit of volatility. If you would invest  805.00  in Siit Emerging Markets on December 7, 2024 and sell it today you would earn a total of  155.00  from holding Siit Emerging Markets or generate 19.25% return on investment over 90 days.

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

Mesirow Financial Small  vs.  Siit Emerging Markets

Mesirow Financial Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesirow Financial Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Siit Emerging Markets

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mesirow Financial and Siit Emerging

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

The idea behind Mesirow Financial Small and Siit Emerging Markets 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.