Correlation Between Intermediate Government and Sit Government
Can any of the company-specific risk be diversified away by investing in both Intermediate Government 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 Intermediate Government and Sit Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and Sit Government Securities, you can compare the effects of market volatilities on Intermediate Government 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 Intermediate Government with a short position of Sit Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Sit Government.
Diversification Opportunities for Intermediate Government and Sit Government
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Intermediate and Sit is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond 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 Intermediate 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 Intermediate Government Bond 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 Intermediate Government i.e., Intermediate Government and Sit Government go up and down completely randomly.
Pair Corralation between Intermediate Government and Sit Government
Assuming the 90 days horizon Intermediate Government is expected to generate 3.24 times less return on investment than Sit Government. But when comparing it to its historical volatility, Intermediate Government Bond is 3.08 times less risky than Sit Government. It trades about 0.15 of its potential returns per unit of risk. Sit Government Securities is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,022 in Sit Government Securities on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Sit Government Securities or generate 0.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Intermediate Government Bond vs. Sit Government Securities
Performance |
Timeline |
Intermediate Government |
Sit Government Securities |
Intermediate Government and Sit Government Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Intermediate Government and Sit Government
The main advantage of trading using opposite Intermediate Government and Sit Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government 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.Intermediate Government vs. SCOR PK | Intermediate Government vs. Morningstar Unconstrained Allocation | Intermediate Government vs. Via Renewables | Intermediate Government vs. Bondbloxx ETF Trust |
Sit Government vs. SCOR PK | Sit Government vs. Morningstar Unconstrained Allocation | Sit Government vs. Via Renewables | Sit Government vs. Bondbloxx ETF Trust |
Check out your portfolio center.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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