Correlation Between Sit Government and Navigator Tactical

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

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

Diversification Opportunities for Sit Government and Navigator Tactical

0.44

Correlation Coefficient

Sit Government  Navigator Tactical

Very weak diversification

The 3 months correlation between Sit and Navigator is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Navigator Tactical Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navigator Tactical Fixed and Sit Government 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 Government Securities are associated (or correlated) with Navigator Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navigator Tactical Fixed has no effect on the direction of Sit Government i.e., Sit Government and Navigator Tactical go up and down completely randomly.

Pair Corralation between Sit Government and Navigator Tactical

Assuming the 90 days horizon Sit Government Securities is expected to under-perform the Navigator Tactical. In addition to that, Sit Government is 1.03 times more volatile than Navigator Tactical Fixed. It trades about -0.02 of its total potential returns per unit of risk. Navigator Tactical Fixed is currently generating about 0.07 per unit of volatility. If you would invest  980.00  in Navigator Tactical Fixed on October 20, 2024 and sell it today you would earn a total of  9.00  from holding Navigator Tactical Fixed or generate 0.92% return on investment over 90 days.

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

Sit Government Securities  vs.  Navigator Tactical Fixed

Sit Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Navigator Tactical Fixed

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Navigator Tactical Fixed are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Navigator Tactical 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 Government and Navigator Tactical

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

The idea behind Sit Government Securities and Navigator Tactical 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.