Correlation Between Simt Tax and Siit Emerging

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

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

Diversification Opportunities for Simt Tax and Siit Emerging

-0.35

Correlation Coefficient

Simt Tax  Siit Emerging

Very good diversification

The 3 months correlation between Simt and Siit is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Smallmid and Siit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Emerging Markets and Simt Tax 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 Tax Managed Smallmid are associated (or correlated) with Siit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Emerging Markets has no effect on the direction of Simt Tax i.e., Simt Tax and Siit Emerging go up and down completely randomly.

Pair Corralation between Simt Tax and Siit Emerging

Assuming the 90 days horizon Simt Tax Managed Smallmid is expected to under-perform the Siit Emerging. In addition to that, Simt Tax is 8.42 times more volatile than Siit Emerging Markets. It trades about -0.09 of its total potential returns per unit of risk. Siit Emerging Markets is currently generating about -0.13 per unit of volatility. If you would invest  882.00  in Siit Emerging Markets on September 20, 2024 and sell it today you would lose (22.00) from holding Siit Emerging Markets or give up 2.49% of portfolio value over 90 days.

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

Simt Tax Managed Smallmid  vs.  Siit Emerging Markets

Simt Tax Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Tax Managed Smallmid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Siit Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Simt Tax and Siit Emerging

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

The idea behind Simt Tax Managed Smallmid and Siit Emerging Markets 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.