Correlation Between Sit U and Sit Mid

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

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

Diversification Opportunities for Sit U and Sit Mid

-0.03

Correlation Coefficient

Sit U  Sit Mid

Good diversification

The 3 months correlation between Sit and Sit is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sit U S and Sit Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Mid Cap and Sit U 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 U S are associated (or correlated) with Sit Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Mid Cap has no effect on the direction of Sit U i.e., Sit U and Sit Mid go up and down completely randomly.

Pair Corralation between Sit U and Sit Mid

Assuming the 90 days horizon Sit U S is expected to generate 0.17 times more return on investment than Sit Mid. However, Sit U S is 6.05 times less risky than Sit Mid. It trades about 0.08 of its potential returns per unit of risk. Sit Mid Cap is currently generating about -0.1 per unit of risk. If you would invest  1,021  in Sit U S on December 3, 2024 and sell it today you would earn a total of  11.00  from holding Sit U S or generate 1.08% return on investment over 90 days.

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

Sit U S  vs.  Sit Mid Cap

Sit U S

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sit U S are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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.

Sit Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sit Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Sit U and Sit Mid

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

The idea behind Sit U S and Sit Mid Cap 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.