Correlation Between Sit International and Simt Core

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

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

Diversification Opportunities for Sit International and Simt Core

0.85

Correlation Coefficient

Sit International  Simt Core

Very poor diversification

The 3 months correlation between Sit and SIMT is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sit International Equity and Simt E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt E Fixed and Sit International 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 International Equity are associated (or correlated) with Simt Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt E Fixed has no effect on the direction of Sit International i.e., Sit International and Simt Core go up and down completely randomly.

Pair Corralation between Sit International and Simt Core

Assuming the 90 days horizon Sit International Equity is expected to under-perform the Simt Core. In addition to that, Sit International is 3.99 times more volatile than Simt E Fixed. It trades about -0.01 of its total potential returns per unit of risk. Simt E Fixed is currently generating about 0.04 per unit of volatility. If you would invest  953.00  in Simt E Fixed on December 2, 2024 and sell it today you would earn a total of  7.00  from holding Simt E Fixed or generate 0.73% return on investment over 90 days.

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

Sit International Equity  vs.  Simt E Fixed

Sit International Equity

Risk-Adjusted Performance

Very Weak

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

Simt E Fixed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simt E Fixed are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Core 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 International and Simt Core

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

The idea behind Sit International Equity and Simt E Fixed 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.