Correlation Between American Funds and Sit Global

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

By analyzing existing cross correlation between American Funds Capital and Sit Global Dividend, you can compare the effects of market volatilities on American Funds and Sit Global 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 American Funds with a short position of Sit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sit Global.

Diversification Opportunities for American Funds and Sit Global

0.86

Correlation Coefficient

American Funds  Sit Global

Very poor diversification

The 3 months correlation between American and Sit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Capital and Sit Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Global Dividend and American Funds 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 American Funds Capital are associated (or correlated) with Sit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Global Dividend has no effect on the direction of American Funds i.e., American Funds and Sit Global go up and down completely randomly.

Pair Corralation between American Funds and Sit Global

Assuming the 90 days horizon American Funds Capital is expected to generate 1.0 times more return on investment than Sit Global. However, American Funds Capital is 1.0 times less risky than Sit Global. It trades about 0.19 of its potential returns per unit of risk. Sit Global Dividend is currently generating about 0.17 per unit of risk. If you would invest  6,454  in American Funds Capital on September 6, 2024 and sell it today you would earn a total of  499.00  from holding American Funds Capital or generate 7.73% return on investment over 90 days.

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

American Funds Capital  vs.  Sit Global Dividend

American Funds Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Capital are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, American Funds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sit Global Dividend

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Global Dividend are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Sit Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with American Funds and Sit Global

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

The idea behind American Funds Capital and Sit Global Dividend 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.