Correlation Between Industrials Ultrasector and Siit Global

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

By analyzing existing cross correlation between Industrials Ultrasector Profund and Siit Global Managed, you can compare the effects of market volatilities on Industrials Ultrasector and Siit 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 Industrials Ultrasector with a short position of Siit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrials Ultrasector and Siit Global.

Diversification Opportunities for Industrials Ultrasector and Siit Global

0.77

Correlation Coefficient

Industrials Ultrasector  Siit Global

Poor diversification

The 3 months correlation between Industrials and Siit is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Industrials Ultrasector Profun and Siit Global Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Global Managed and Industrials Ultrasector 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 Industrials Ultrasector Profund are associated (or correlated) with Siit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Global Managed has no effect on the direction of Industrials Ultrasector i.e., Industrials Ultrasector and Siit Global go up and down completely randomly.

Pair Corralation between Industrials Ultrasector and Siit Global

Assuming the 90 days horizon Industrials Ultrasector Profund is expected to under-perform the Siit Global. In addition to that, Industrials Ultrasector is 3.55 times more volatile than Siit Global Managed. It trades about -0.02 of its total potential returns per unit of risk. Siit Global Managed is currently generating about 0.03 per unit of volatility. If you would invest  1,255  in Siit Global Managed on September 20, 2024 and sell it today you would earn a total of  8.00  from holding Siit Global Managed or generate 0.64% return on investment over 90 days.

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

Industrials Ultrasector Profun  vs.  Siit Global Managed

Industrials Ultrasector

Risk-Adjusted Performance

0 of 100

Weak

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

Siit Global Managed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Global Managed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Industrials Ultrasector and Siit Global

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

The idea behind Industrials Ultrasector Profund and Siit Global Managed 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.