Correlation Between Value Line and Sit Balanced

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

By analyzing existing cross correlation between Value Line Asset and Sit Balanced Fund, you can compare the effects of market volatilities on Value Line and Sit Balanced 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 Value Line with a short position of Sit Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Line and Sit Balanced.

Diversification Opportunities for Value Line and Sit Balanced

0.8

Correlation Coefficient

Value Line  Sit Balanced

Very poor diversification

The 3 months correlation between Value and Sit is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Value Line Asset and Sit Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Balanced and Value Line 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 Value Line Asset are associated (or correlated) with Sit Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Balanced has no effect on the direction of Value Line i.e., Value Line and Sit Balanced go up and down completely randomly.

Pair Corralation between Value Line and Sit Balanced

Assuming the 90 days horizon Value Line is expected to generate 1.6 times less return on investment than Sit Balanced. But when comparing it to its historical volatility, Value Line Asset is 1.06 times less risky than Sit Balanced. It trades about 0.13 of its potential returns per unit of risk. Sit Balanced Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,412  in Sit Balanced Fund on September 5, 2024 and sell it today you would earn a total of  226.00  from holding Sit Balanced Fund or generate 6.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Value Line Asset  vs.  Sit Balanced Fund

Value Line Asset

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Value Line Asset are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Value Line is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sit Balanced

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Balanced Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sit Balanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Value Line and Sit Balanced

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

The idea behind Value Line Asset and Sit Balanced Fund 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.