Correlation Between Sit Mid and Sit U

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

By analyzing existing cross correlation between Sit Mid Cap and Sit U S, you can compare the effects of market volatilities on Sit Mid and Sit U 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 Mid with a short position of Sit U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Mid and Sit U.

Diversification Opportunities for Sit Mid and Sit U

-0.79

Correlation Coefficient

Sit Mid  Sit U

Pay attention - limited upside

The 3 months correlation between Sit and Sit is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sit Mid Cap and Sit U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit U S and Sit Mid 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 Mid Cap are associated (or correlated) with Sit U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit U S has no effect on the direction of Sit Mid i.e., Sit Mid and Sit U go up and down completely randomly.

Pair Corralation between Sit Mid and Sit U

Assuming the 90 days horizon Sit Mid Cap is expected to under-perform the Sit U. In addition to that, Sit Mid is 6.0 times more volatile than Sit U S. It trades about -0.11 of its total potential returns per unit of risk. Sit U S is currently generating about 0.18 per unit of volatility. If you would invest  1,007  in Sit U S on December 26, 2024 and sell it today you would earn a total of  25.00  from holding Sit U S or generate 2.48% return on investment over 90 days.

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

Sit Mid Cap  vs.  Sit U S

Sit Mid Cap

Risk-Adjusted Performance

Very Weak

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

Sit U S

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sit U S are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sit U is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sit Mid and Sit U

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

The idea behind Sit Mid Cap and Sit U S 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.