Correlation Between Sit Balanced and Sit Global

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

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

Diversification Opportunities for Sit Balanced and Sit Global

0.82

Correlation Coefficient

Sit Balanced  Sit Global

Very poor diversification

The 3 months correlation between Sit and Sit is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sit Balanced Fund 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 Sit Balanced 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 Sit Balanced Fund 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 Sit Balanced i.e., Sit Balanced and Sit Global go up and down completely randomly.

Pair Corralation between Sit Balanced and Sit Global

Assuming the 90 days horizon Sit Balanced Fund is expected to generate 0.82 times more return on investment than Sit Global. However, Sit Balanced Fund is 1.22 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 0.11 per unit of risk. 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	100.0%
Values	Daily Returns

Sit Balanced Fund  vs.  Sit Global Dividend

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.

Sit Global Dividend

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Global Dividend are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sit 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 Sit Balanced and Sit Global

The main advantage of trading using opposite Sit Balanced and Sit Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Balanced 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 Sit Balanced Fund 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.