Correlation Between Simt E and Simt Tax

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

By analyzing existing cross correlation between Simt E Fixed and Simt Tax Managed Smallmid, you can compare the effects of market volatilities on Simt E and Simt Tax 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 Simt E with a short position of Simt Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt E and Simt Tax.

Diversification Opportunities for Simt E and Simt Tax

-0.51

Correlation Coefficient

Simt E  Simt Tax

Excellent diversification

The 3 months correlation between Simt and Simt is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Simt E Fixed and Simt Tax Managed Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed and Simt E 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 Simt E Fixed are associated (or correlated) with Simt Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Simt E i.e., Simt E and Simt Tax go up and down completely randomly.

Pair Corralation between Simt E and Simt Tax

Assuming the 90 days horizon Simt E Fixed is expected to under-perform the Simt Tax. But the mutual fund apears to be less risky and, when comparing its historical volatility, Simt E Fixed is 3.52 times less risky than Simt Tax. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Simt Tax Managed Smallmid is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,708  in Simt Tax Managed Smallmid on September 16, 2024 and sell it today you would earn a total of  225.00  from holding Simt Tax Managed Smallmid or generate 8.31% return on investment over 90 days.

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

Simt E Fixed  vs.  Simt Tax Managed Smallmid

Simt E Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Simt Tax Managed

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Smallmid are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Tax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Simt E and Simt Tax

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

The idea behind Simt E Fixed and Simt Tax Managed Smallmid 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.