Correlation Between US Treasury and SGI Dynamic

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

By analyzing existing cross correlation between US Treasury 20 and SGI Dynamic Tactical, you can compare the effects of market volatilities on US Treasury and SGI Dynamic 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 US Treasury with a short position of SGI Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Treasury and SGI Dynamic.

Diversification Opportunities for US Treasury and SGI Dynamic

-0.47

Correlation Coefficient

US Treasury  SGI Dynamic

Very good diversification

The 3 months correlation between UTWY and SGI is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding US Treasury 20 and SGI Dynamic Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Dynamic Tactical and US Treasury 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 US Treasury 20 are associated (or correlated) with SGI Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Dynamic Tactical has no effect on the direction of US Treasury i.e., US Treasury and SGI Dynamic go up and down completely randomly.

Pair Corralation between US Treasury and SGI Dynamic

Given the investment horizon of 90 days US Treasury 20 is expected to under-perform the SGI Dynamic. In addition to that, US Treasury is 1.04 times more volatile than SGI Dynamic Tactical. It trades about -0.18 of its total potential returns per unit of risk. SGI Dynamic Tactical is currently generating about 0.1 per unit of volatility. If you would invest  3,054  in SGI Dynamic Tactical on September 14, 2024 and sell it today you would earn a total of  127.00  from holding SGI Dynamic Tactical or generate 4.16% return on investment over 90 days.

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

US Treasury 20  vs.  SGI Dynamic Tactical

US Treasury 20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US Treasury 20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

SGI Dynamic Tactical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SGI Dynamic Tactical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SGI Dynamic is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with US Treasury and SGI Dynamic

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

The idea behind US Treasury 20 and SGI Dynamic Tactical 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 CEOs Directory module to screen CEOs from public companies around the world.