Correlation Between Sit Government and Meridian Small

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

Diversification Opportunities for Sit Government and Meridian Small

0.0

Correlation Coefficient

Sit Government  Meridian Small

Pay attention - limited upside

The 3 months correlation between Sit and Meridian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Meridian Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridian Small Cap 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 Meridian Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridian Small Cap has no effect on the direction of Sit Government i.e., Sit Government and Meridian Small go up and down completely randomly.

Pair Corralation between Sit Government and Meridian Small

If you would invest  987.00  in Sit Government Securities on September 13, 2024 and sell it today you would earn a total of  40.00  from holding Sit Government Securities or generate 4.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

Sit Government Securities  vs.  Meridian Small Cap

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.

Meridian Small Cap

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Meridian Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Meridian Small 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 Meridian Small

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

The idea behind Sit Government Securities and Meridian Small Cap 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.