Correlation Between Intermediate Government and Sit Us
Can any of the company-specific risk be diversified away by investing in both Intermediate Government and Sit Us 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 Intermediate Government and Sit Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Government Bond and Sit Government Securities, you can compare the effects of market volatilities on Intermediate Government and Sit Us 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 Intermediate Government with a short position of Sit Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate Government and Sit Us.
Diversification Opportunities for Intermediate Government and Sit Us
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Intermediate and Sit is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond and Sit Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Government Securities and Intermediate 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 Intermediate Government Bond are associated (or correlated) with Sit Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Government Securities has no effect on the direction of Intermediate Government i.e., Intermediate Government and Sit Us go up and down completely randomly.
Pair Corralation between Intermediate Government and Sit Us
Assuming the 90 days horizon Intermediate Government is expected to generate 1.63 times less return on investment than Sit Us. But when comparing it to its historical volatility, Intermediate Government Bond is 1.57 times less risky than Sit Us. It trades about 0.15 of its potential returns per unit of risk. Sit Government Securities is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,017 in Sit Government Securities on June 1, 2025 and sell it today you would earn a total of 21.00 from holding Sit Government Securities or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Government Bond vs. Sit Government Securities
Performance |
| Timeline |
| Intermediate Government |
| Sit Government Securities |
Intermediate Government and Sit Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate Government and Sit Us
The main advantage of trading using opposite Intermediate Government and Sit Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate Government position performs unexpectedly, Sit Us 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 Us will offset losses from the drop in Sit Us' long position.The idea behind Intermediate Government Bond and Sit Government Securities 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.
| Sit Us vs. Sit Global Dividend | Sit Us vs. Sit Small Cap | Sit Us vs. Sit Small Cap | Sit Us vs. Sit Mid Cap |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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