Correlation Between Sit Government and Intermediate Government

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

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

Diversification Opportunities for Sit Government and Intermediate Government

0.27

Correlation Coefficient

Sit Government  Intermediate Government

Modest diversification

The 3 months correlation between Sit and Intermediate is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Intermediate Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Government and Sit 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 Sit Government Securities are associated (or correlated) with Intermediate Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Government has no effect on the direction of Sit Government i.e., Sit Government and Intermediate Government go up and down completely randomly.

Pair Corralation between Sit Government and Intermediate Government

Assuming the 90 days horizon Sit Government Securities is expected to generate 2.7 times more return on investment than Intermediate Government. However, Sit Government is 2.7 times more volatile than Intermediate Government Bond. It trades about 0.09 of its potential returns per unit of risk. Intermediate Government Bond is currently generating about 0.2 per unit of risk. If you would invest  994.00  in Sit Government Securities on September 13, 2024 and sell it today you would earn a total of  31.00  from holding Sit Government Securities or generate 3.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.32%
Values	Daily Returns

Sit Government Securities  vs.  Intermediate Government Bond

Sit Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Intermediate Government

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Government Bond are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Intermediate Government 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 Government and Intermediate Government

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

The idea behind Sit Government Securities and Intermediate Government Bond 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.