Correlation Between Pax Large and Siit Large

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

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

Diversification Opportunities for Pax Large and Siit Large

1.0

Correlation Coefficient

Pax Large  Siit Large

No risk reduction

The 3 months correlation between Pax and Siit is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Pax Large Cap and Siit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Large Cap and Pax 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 Pax Large Cap are associated (or correlated) with Siit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Large Cap has no effect on the direction of Pax Large i.e., Pax Large and Siit Large go up and down completely randomly.

Pair Corralation between Pax Large and Siit Large

Assuming the 90 days horizon Pax Large Cap is expected to generate 1.01 times more return on investment than Siit Large. However, Pax Large is 1.01 times more volatile than Siit Large Cap. It trades about 0.29 of its potential returns per unit of risk. Siit Large Cap is currently generating about 0.24 per unit of risk. If you would invest  1,195  in Pax Large Cap on May 6, 2025 and sell it today you would earn a total of  170.00  from holding Pax Large Cap or generate 14.23% return on investment over 90 days.

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

Pax Large Cap  vs.  Siit Large Cap

Pax Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pax Large Cap are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Pax Large showed solid returns over the last few months and may actually be approaching a breakup point.

Siit Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Large Cap are ranked lower than 18 (%) 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 September 2025.

Pair Trading with Pax Large and Siit Large

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

The idea behind Pax Large Cap and Siit Large Cap 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.