Correlation Between Sit Developing and Sit U

Can any of the company-specific risk be diversified away by investing in both Sit Developing 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 Developing 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 Developing Markets and Sit U S, you can compare the effects of market volatilities on Sit Developing 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 Developing with a short position of Sit U. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Developing and Sit U.

Diversification Opportunities for Sit Developing and Sit U

-0.45

Correlation Coefficient

Sit Developing  Sit U

Very good diversification

The 3 months correlation between Sit and Sit is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sit Developing Markets 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 Developing 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 Developing Markets 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 Developing i.e., Sit Developing and Sit U go up and down completely randomly.

Pair Corralation between Sit Developing and Sit U

Assuming the 90 days horizon Sit Developing Markets is expected to generate 5.14 times more return on investment than Sit U. However, Sit Developing is 5.14 times more volatile than Sit U S. It trades about 0.11 of its potential returns per unit of risk. Sit U S is currently generating about -0.09 per unit of risk. If you would invest  1,681  in Sit Developing Markets on September 5, 2024 and sell it today you would earn a total of  121.00  from holding Sit Developing Markets or generate 7.2% return on investment over 90 days.

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

Sit Developing Markets  vs.  Sit U S

Sit Developing Markets

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Developing Markets are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Sit Developing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sit U S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sit U S has generated negative risk-adjusted returns adding no value to fund investors. 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 Developing and Sit U

The main advantage of trading using opposite Sit Developing and Sit U positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Developing 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 Developing Markets 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.