Correlation Between Sit U and Sit Small

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

Diversification Opportunities for Sit U and Sit Small

-0.81

Correlation Coefficient

Sit U  Sit Small

Pay attention - limited upside

The 3 months correlation between Sit and Sit is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Sit U S and Sit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Small 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Small Cap has no effect on the direction of Sit U i.e., Sit U and Sit Small go up and down completely randomly.

Pair Corralation between Sit U and Sit Small

Assuming the 90 days horizon Sit U S is expected to generate 0.17 times more return on investment than Sit Small. However, Sit U S is 5.83 times less risky than Sit Small. It trades about 0.21 of its potential returns per unit of risk. Sit Small Cap is currently generating about -0.15 per unit of risk. If you would invest  1,006  in Sit U S on December 24, 2024 and sell it today you would earn a total of  28.00  from holding Sit U S or generate 2.78% return on investment over 90 days.

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

Sit U S  vs.  Sit Small Cap

Sit U S

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sit U S are ranked lower than 16 (%) 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 Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sit Small 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 Small

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

The idea behind Sit U S and Sit Small 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.