Correlation Between Sit Government and Mercer Funds

Can any of the company-specific risk be diversified away by investing in both Sit Government and Mercer Funds 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 Mercer Funds 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 Mercer Funds , you can compare the effects of market volatilities on Sit Government and Mercer Funds 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 Mercer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sit Government and Mercer Funds.

Diversification Opportunities for Sit Government and Mercer Funds

-0.16

Correlation Coefficient

Sit Government  Mercer Funds

Good diversification

The 3 months correlation between Sit and Mercer is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sit Government Securities and Mercer Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer Funds 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 Mercer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer Funds has no effect on the direction of Sit Government i.e., Sit Government and Mercer Funds go up and down completely randomly.

Pair Corralation between Sit Government and Mercer Funds

Assuming the 90 days horizon Sit Government Securities is expected to generate 0.17 times more return on investment than Mercer Funds. However, Sit Government Securities is 5.77 times less risky than Mercer Funds. It trades about 0.05 of its potential returns per unit of risk. Mercer Funds is currently generating about 0.0 per unit of risk. If you would invest  1,038  in Sit Government Securities on September 11, 2025 and sell it today you would earn a total of  5.00  from holding Sit Government Securities or generate 0.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sit Government Securities  vs.  Mercer Funds

Sit Government Securities

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Sit Government Securities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sit Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mercer Funds

Risk-Adjusted Performance

Weakest

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

Pair Trading with Sit Government and Mercer Funds

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

The idea behind Sit Government Securities and Mercer Funds 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.