Correlation Between Simt Multi and Stet Tax

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

By analyzing existing cross correlation between Simt Multi Asset Capital and Stet Tax Advantaged Income, you can compare the effects of market volatilities on Simt Multi and Stet 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 Multi with a short position of Stet Tax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Multi and Stet Tax.

Diversification Opportunities for Simt Multi and Stet Tax

0.67

Correlation Coefficient

Simt Multi  Stet Tax

Poor diversification

The 3 months correlation between Simt and Stet is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Asset Capital and Stet Tax Advantaged Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet Tax Advantaged and Simt Multi 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 Multi Asset Capital are associated (or correlated) with Stet Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet Tax Advantaged has no effect on the direction of Simt Multi i.e., Simt Multi and Stet Tax go up and down completely randomly.

Pair Corralation between Simt Multi and Stet Tax

Assuming the 90 days horizon Simt Multi Asset Capital is expected to under-perform the Stet Tax. In addition to that, Simt Multi is 1.32 times more volatile than Stet Tax Advantaged Income. It trades about -0.1 of its total potential returns per unit of risk. Stet Tax Advantaged Income is currently generating about -0.06 per unit of volatility. If you would invest  943.00  in Stet Tax Advantaged Income on September 18, 2024 and sell it today you would lose (9.00) from holding Stet Tax Advantaged Income or give up 0.95% of portfolio value over 90 days.

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

Simt Multi Asset Capital  vs.  Stet Tax Advantaged Income

Simt Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Stet Tax Advantaged

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Simt Multi and Stet Tax

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

The idea behind Simt Multi Asset Capital and Stet Tax Advantaged Income 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.