Correlation Between Siit Emerging and Sterling Capital

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

By analyzing existing cross correlation between Siit Emerging Markets and Sterling Capital Mid, you can compare the effects of market volatilities on Siit Emerging and Sterling Capital 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 Emerging with a short position of Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siit Emerging and Sterling Capital.

Diversification Opportunities for Siit Emerging and Sterling Capital

-0.28

Correlation Coefficient

Siit Emerging  Sterling Capital

Very good diversification

The 3 months correlation between Siit and Sterling is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Siit Emerging Markets and Sterling Capital Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Mid and Siit Emerging 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 Emerging Markets are associated (or correlated) with Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Mid has no effect on the direction of Siit Emerging i.e., Siit Emerging and Sterling Capital go up and down completely randomly.

Pair Corralation between Siit Emerging and Sterling Capital

Assuming the 90 days horizon Siit Emerging Markets is expected to generate 0.51 times more return on investment than Sterling Capital. However, Siit Emerging Markets is 1.97 times less risky than Sterling Capital. It trades about 0.06 of its potential returns per unit of risk. Sterling Capital Mid is currently generating about -0.07 per unit of risk. If you would invest  989.00  in Siit Emerging Markets on September 18, 2024 and sell it today you would earn a total of  24.00  from holding Siit Emerging Markets or generate 2.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Siit Emerging Markets  vs.  Sterling Capital Mid

Siit Emerging Markets

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Siit Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sterling Capital Mid

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Siit Emerging and Sterling Capital

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

The idea behind Siit Emerging Markets and Sterling Capital Mid 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.