Correlation Between Sit Small and Sit U

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

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

Diversification Opportunities for Sit Small and Sit U

-0.58

Correlation Coefficient

Sit Small  Sit U

Excellent diversification

The 3 months correlation between Sit and Sit is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sit Small Cap and Sit U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit U S and Sit Small 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 Small Cap are associated (or correlated) with Sit U. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit U S has no effect on the direction of Sit Small i.e., Sit Small and Sit U go up and down completely randomly.

Pair Corralation between Sit Small and Sit U

Assuming the 90 days horizon Sit Small Cap is expected to under-perform the Sit U. In addition to that, Sit Small is 4.91 times more volatile than Sit U S. It trades about -0.09 of its total potential returns per unit of risk. Sit U S is currently generating about 0.32 per unit of volatility. If you would invest  1,016  in Sit U S on September 13, 2024 and sell it today you would earn a total of  12.00  from holding Sit U S or generate 1.18% return on investment over 90 days.

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

Sit Small Cap  vs.  Sit U S

Sit Small Cap

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Small Cap are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Sit Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sit U S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sit U S has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sit U 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 Small and Sit U

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

The idea behind Sit Small Cap and Sit U S 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.