Correlation Between Sit Government and Power Floating

Can any of the company-specific risk be diversified away by investing in both Sit Government and Power Floating 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 Power Floating 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 Power Floating Rate, you can compare the effects of market volatilities on Sit Government and Power Floating 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 Power Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Government and Power Floating.

Diversification Opportunities for Sit Government and Power Floating

-0.38

Correlation Coefficient

Sit Government  Power Floating

Very good diversification

The 3 months correlation between Sit and Power is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Power Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Floating Rate 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 Power Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Floating Rate has no effect on the direction of Sit Government i.e., Sit Government and Power Floating go up and down completely randomly.

Pair Corralation between Sit Government and Power Floating

Assuming the 90 days horizon Sit Government Securities is expected to under-perform the Power Floating. In addition to that, Sit Government is 1.28 times more volatile than Power Floating Rate. It trades about -0.17 of its total potential returns per unit of risk. Power Floating Rate is currently generating about -0.02 per unit of volatility. If you would invest  951.00  in Power Floating Rate on September 30, 2024 and sell it today you would lose (2.00) from holding Power Floating Rate or give up 0.21% of portfolio value over 90 days.

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

Sit Government Securities  vs.  Power Floating Rate

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.

Power Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Floating Rate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Power Floating 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 Power Floating

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

The idea behind Sit Government Securities and Power Floating Rate 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.