Correlation Between Sp Midcap and Siit Ultra

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

By analyzing existing cross correlation between Sp Midcap Index and Siit Ultra Short, you can compare the effects of market volatilities on Sp Midcap and Siit Ultra 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 Sp Midcap with a short position of Siit Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Siit Ultra.

Diversification Opportunities for Sp Midcap and Siit Ultra

-0.18

Correlation Coefficient

Sp Midcap  Siit Ultra

Good diversification

The 3 months correlation between SPMIX and Siit is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Siit Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Ultra Short and Sp Midcap 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 Sp Midcap Index are associated (or correlated) with Siit Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Ultra Short has no effect on the direction of Sp Midcap i.e., Sp Midcap and Siit Ultra go up and down completely randomly.

Pair Corralation between Sp Midcap and Siit Ultra

Assuming the 90 days horizon Sp Midcap Index is expected to generate 11.18 times more return on investment than Siit Ultra. However, Sp Midcap is 11.18 times more volatile than Siit Ultra Short. It trades about 0.02 of its potential returns per unit of risk. Siit Ultra Short is currently generating about 0.21 per unit of risk. If you would invest  2,380  in Sp Midcap Index on October 7, 2024 and sell it today you would earn a total of  192.00  from holding Sp Midcap Index or generate 8.07% return on investment over 90 days.

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

Sp Midcap Index  vs.  Siit Ultra Short

Sp Midcap Index

Risk-Adjusted Performance

0 of 100

Very Weak

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

Siit Ultra Short

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Ultra Short are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sp Midcap and Siit Ultra

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

The idea behind Sp Midcap Index and Siit Ultra Short 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.