Correlation Between American Funds and Sit Emerging
Can any of the company-specific risk be diversified away by investing in both American Funds and Sit Emerging 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 Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Inflation and Sit Emerging Markets, you can compare the effects of market volatilities on American Funds and Sit Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Sit Emerging.
Diversification Opportunities for American Funds and Sit Emerging
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Sit is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Sit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Emerging Markets 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 Inflation are associated (or correlated) with Sit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Emerging Markets has no effect on the direction of American Funds i.e., American Funds and Sit Emerging go up and down completely randomly.
Pair Corralation between American Funds and Sit Emerging
Assuming the 90 days horizon American Funds Inflation is expected to under-perform the Sit Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Funds Inflation is 1.24 times less risky than Sit Emerging. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Sit Emerging Markets is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 878.00 in Sit Emerging Markets on September 11, 2024 and sell it today you would earn a total of 3.00 from holding Sit Emerging Markets or generate 0.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
American Funds Inflation vs. Sit Emerging Markets
Performance |
Timeline |
American Funds Inflation |
Sit Emerging Markets |
American Funds and Sit Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Funds and Sit Emerging
The main advantage of trading using opposite American Funds and Sit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Sit Emerging 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 Emerging will offset losses from the drop in Sit Emerging's long position.American Funds vs. T Rowe Price | American Funds vs. Strategic Allocation Moderate | American Funds vs. Touchstone Large Cap | American Funds vs. Aqr Large Cap |
Sit Emerging vs. Simt Multi Asset Accumulation | Sit Emerging vs. Saat Market Growth | Sit Emerging vs. Simt Real Return | Sit Emerging vs. Simt Small Cap |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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