Correlation Between Counterpoint Tactical and Sit Government

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

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

Diversification Opportunities for Counterpoint Tactical and Sit Government

0.65

Correlation Coefficient

Counterpoint Tactical  Sit Government

Poor diversification

The 3 months correlation between Counterpoint and Sit is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Counterpoint Tactical Municipa and Sit Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Government Securities and Counterpoint Tactical 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 Counterpoint Tactical Municipal are associated (or correlated) with Sit Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Government Securities has no effect on the direction of Counterpoint Tactical i.e., Counterpoint Tactical and Sit Government go up and down completely randomly.

Pair Corralation between Counterpoint Tactical and Sit Government

Assuming the 90 days horizon Counterpoint Tactical Municipal is expected to generate 0.78 times more return on investment than Sit Government. However, Counterpoint Tactical Municipal is 1.28 times less risky than Sit Government. It trades about 0.11 of its potential returns per unit of risk. Sit Government Securities is currently generating about 0.02 per unit of risk. If you would invest  1,093  in Counterpoint Tactical Municipal on September 17, 2024 and sell it today you would earn a total of  4.00  from holding Counterpoint Tactical Municipal or generate 0.37% return on investment over 90 days.

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

Counterpoint Tactical Municipa  vs.  Sit Government Securities

Counterpoint Tactical

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Counterpoint Tactical and Sit Government

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

The idea behind Counterpoint Tactical Municipal and Sit Government Securities 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.