Correlation Between Sit Government and Intermediate Government
Can any of the company-specific risk be diversified away by investing in both Sit Government and Intermediate Government 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 Government and Intermediate Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sit Government Securities and Intermediate Government Bond, you can compare the effects of market volatilities on Sit Government and Intermediate Government 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 Government with a short position of Intermediate Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Government and Intermediate Government.
Diversification Opportunities for Sit Government and Intermediate Government
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sit and Intermediate is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Intermediate Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Government and Sit 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 Sit Government Securities are associated (or correlated) with Intermediate Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Government has no effect on the direction of Sit Government i.e., Sit Government and Intermediate Government go up and down completely randomly.
Pair Corralation between Sit Government and Intermediate Government
Assuming the 90 days horizon Sit Government is expected to generate 1.08 times less return on investment than Intermediate Government. In addition to that, Sit Government is 1.3 times more volatile than Intermediate Government Bond. It trades about 0.03 of its total potential returns per unit of risk. Intermediate Government Bond is currently generating about 0.04 per unit of volatility. If you would invest 950.00 in Intermediate Government Bond on April 22, 2025 and sell it today you would earn a total of 1.00 from holding Intermediate Government Bond or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sit Government Securities vs. Intermediate Government Bond
Performance |
| Timeline |
| Sit Government Securities |
| Intermediate Government |
Sit Government and Intermediate Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sit Government and Intermediate Government
The main advantage of trading using opposite Sit Government and Intermediate Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sit Government position performs unexpectedly, Intermediate Government 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 Intermediate Government will offset losses from the drop in Intermediate Government's long position.| Sit Government vs. World Precious Minerals | Sit Government vs. Gold And Precious | Sit Government vs. Goldman Sachs Clean | Sit Government vs. Global Gold Fund |
| Intermediate Government vs. Western Asset Short | Intermediate Government vs. Nuveen Short Term | Intermediate Government vs. Ultra Short Term Fixed | Intermediate Government vs. Aqr Sustainable Long Short |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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