Correlation Between Semiconductor Ultrasector and Sit Small

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

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

Diversification Opportunities for Semiconductor Ultrasector and Sit Small

0.93

Correlation Coefficient

Semiconductor Ultrasector  Sit Small

Almost no diversification

The 3 months correlation between Semiconductor and Sit is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Semiconductor Ultrasector Prof and Sit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Small Cap and Semiconductor Ultrasector 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 Semiconductor Ultrasector Profund are associated (or correlated) with Sit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Small Cap has no effect on the direction of Semiconductor Ultrasector i.e., Semiconductor Ultrasector and Sit Small go up and down completely randomly.

Pair Corralation between Semiconductor Ultrasector and Sit Small

Assuming the 90 days horizon Semiconductor Ultrasector Profund is expected to generate 3.0 times more return on investment than Sit Small. However, Semiconductor Ultrasector is 3.0 times more volatile than Sit Small Cap. It trades about -0.01 of its potential returns per unit of risk. Sit Small Cap is currently generating about -0.05 per unit of risk. If you would invest  2,399  in Semiconductor Ultrasector Profund on February 3, 2025 and sell it today you would lose (305.00) from holding Semiconductor Ultrasector Profund or give up 12.71% of portfolio value over 90 days.

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

Semiconductor Ultrasector Prof  vs.  Sit Small Cap

Semiconductor Ultrasector

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semiconductor Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Semiconductor Ultrasector is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sit Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sit Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sit Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Semiconductor Ultrasector and Sit Small

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

The idea behind Semiconductor Ultrasector Profund and Sit Small 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.