Correlation Between Sit International and American Beacon
Can any of the company-specific risk be diversified away by investing in both Sit International and American Beacon 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 International and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit International Equity and American Beacon Small, you can compare the effects of market volatilities on Sit International and American Beacon 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 International with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit International and American Beacon.
Diversification Opportunities for Sit International and American Beacon
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sit and American is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sit International Equity and American Beacon Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Small and Sit International 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 International Equity are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Small has no effect on the direction of Sit International i.e., Sit International and American Beacon go up and down completely randomly.
Pair Corralation between Sit International and American Beacon
Assuming the 90 days horizon Sit International Equity is expected to generate 0.55 times more return on investment than American Beacon. However, Sit International Equity is 1.83 times less risky than American Beacon. It trades about 0.12 of its potential returns per unit of risk. American Beacon Small is currently generating about 0.04 per unit of risk. If you would invest 1,409 in Sit International Equity on August 15, 2025 and sell it today you would earn a total of 69.00 from holding Sit International Equity or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit International Equity vs. American Beacon Small
Performance |
| Timeline |
| Sit International Equity |
| American Beacon Small |
Sit International and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit International and American Beacon
The main advantage of trading using opposite Sit International and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit International position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Sit International vs. American Beacon Small | Sit International vs. American Beacon Small | Sit International vs. American Beacon Small | Sit International vs. Wells Fargo Emerging |
| American Beacon vs. American Beacon Small | American Beacon vs. American Beacon Small | American Beacon vs. American Beacon Large | American Beacon vs. Sit International Equity |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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