Correlation Between Sit Small and Sit Mutual

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

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

Diversification Opportunities for Sit Small and Sit Mutual

-0.74

Correlation Coefficient

Sit Small  Sit Mutual

Pay attention - limited upside

The 3 months correlation between Sit and Sit is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Mutual Funds and Sit Small 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 Small Cap are associated (or correlated) with Sit Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Mutual Funds has no effect on the direction of Sit Small i.e., Sit Small and Sit Mutual go up and down completely randomly.

Pair Corralation between Sit Small and Sit Mutual

Assuming the 90 days horizon Sit Small Cap is expected to under-perform the Sit Mutual. In addition to that, Sit Small is 6.52 times more volatile than Sit Mutual Funds. It trades about -0.07 of its total potential returns per unit of risk. Sit Mutual Funds is currently generating about 0.18 per unit of volatility. If you would invest  941.00  in Sit Mutual Funds on December 20, 2024 and sell it today you would earn a total of  17.00  from holding Sit Mutual Funds or generate 1.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Sit Small Cap  vs.  Sit Mutual Funds

Sit Small Cap

Risk-Adjusted Performance

Very Weak

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

Sit Mutual Funds

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Mutual Funds 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 Mutual 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 Small and Sit Mutual

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

The idea behind Sit Small Cap and Sit Mutual Funds 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.