Correlation Between Siit High and Global E

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

By analyzing existing cross correlation between Siit High Yield and Global E Portfolio, you can compare the effects of market volatilities on Siit High and Global E 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 Siit High with a short position of Global E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siit High and Global E.

Diversification Opportunities for Siit High and Global E

0.22

Correlation Coefficient

Siit High  Global E

Modest diversification

The 3 months correlation between Siit and Global is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Siit High Yield and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio and Siit High 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 Siit High Yield are associated (or correlated) with Global E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Siit High i.e., Siit High and Global E go up and down completely randomly.

Pair Corralation between Siit High and Global E

Assuming the 90 days horizon Siit High Yield is expected to generate 0.22 times more return on investment than Global E. However, Siit High Yield is 4.49 times less risky than Global E. It trades about 0.14 of its potential returns per unit of risk. Global E Portfolio is currently generating about -0.01 per unit of risk. If you would invest  696.00  in Siit High Yield on December 20, 2024 and sell it today you would earn a total of  14.00  from holding Siit High Yield or generate 2.01% return on investment over 90 days.

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

Siit High Yield  vs.  Global E Portfolio

Siit High Yield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siit High Yield are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global E Portfolio

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Siit High and Global E

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

The idea behind Siit High Yield and Global E Portfolio 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.