Correlation Between Siit Large and Siit World

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

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

Diversification Opportunities for Siit Large and Siit World

0.88

Correlation Coefficient

Siit Large  Siit World

Very poor diversification

The 3 months correlation between Siit and Siit is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Siit Large Cap and Siit World Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit World Select and Siit Large 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 Siit Large Cap are associated (or correlated) with Siit World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit World Select has no effect on the direction of Siit Large i.e., Siit Large and Siit World go up and down completely randomly.

Pair Corralation between Siit Large and Siit World

Assuming the 90 days horizon Siit Large Cap is expected to generate 1.14 times more return on investment than Siit World. However, Siit Large is 1.14 times more volatile than Siit World Select. It trades about 0.16 of its potential returns per unit of risk. Siit World Select is currently generating about 0.12 per unit of risk. If you would invest  973.00  in Siit Large Cap on September 14, 2024 and sell it today you would earn a total of  331.00  from holding Siit Large Cap or generate 34.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.63%
Values	Daily Returns

Siit Large Cap  vs.  Siit World Select

Siit Large Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Large Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Siit Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Siit World Select

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siit World Select are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit World is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Siit Large and Siit World

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

The idea behind Siit Large Cap and Siit World Select 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.