Correlation Between Stet Short and Sit International

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

By analyzing existing cross correlation between Stet Short Duration and Sit International Equity, you can compare the effects of market volatilities on Stet Short and Sit International 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 Stet Short with a short position of Sit International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stet Short and Sit International.

Diversification Opportunities for Stet Short and Sit International

-0.11

Correlation Coefficient

Stet Short  Sit International

Good diversification

The 3 months correlation between Stet and Sit is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Stet Short Duration and Sit International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit International Equity and Stet Short 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 Stet Short Duration are associated (or correlated) with Sit International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit International Equity has no effect on the direction of Stet Short i.e., Stet Short and Sit International go up and down completely randomly.

Pair Corralation between Stet Short and Sit International

Assuming the 90 days horizon Stet Short Duration is expected to generate 0.03 times more return on investment than Sit International. However, Stet Short Duration is 37.58 times less risky than Sit International. It trades about 0.1 of its potential returns per unit of risk. Sit International Equity is currently generating about -0.17 per unit of risk. If you would invest  997.00  in Stet Short Duration on September 18, 2024 and sell it today you would earn a total of  1.00  from holding Stet Short Duration or generate 0.1% return on investment over 90 days.

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

Stet Short Duration  vs.  Sit International Equity

Stet Short Duration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stet Short Duration are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stet Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sit International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sit International Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Stet Short and Sit International

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

The idea behind Stet Short Duration and Sit International Equity 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.