Correlation Between Simt Tax and Simt Real

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

Diversification Opportunities for Simt Tax and Simt Real

-0.06

Correlation Coefficient

Simt Tax  Simt Real

Good diversification

The 3 months correlation between Simt and Simt is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Smallmid and Simt Real Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Real Return 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 Simt Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Real Return has no effect on the direction of Simt Tax i.e., Simt Tax and Simt Real go up and down completely randomly.

Pair Corralation between Simt Tax and Simt Real

Assuming the 90 days horizon Simt Tax Managed Smallmid is expected to under-perform the Simt Real. In addition to that, Simt Tax is 18.39 times more volatile than Simt Real Return. It trades about -0.1 of its total potential returns per unit of risk. Simt Real Return is currently generating about -0.1 per unit of volatility. If you would invest  969.00  in Simt Real Return on September 20, 2024 and sell it today you would lose (9.00) from holding Simt Real Return or give up 0.93% 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.  Simt Real Return

Simt Tax Managed

Risk-Adjusted Performance

0 of 100

Modest

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.

Simt Real Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Real Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Simt Real 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 Simt Real

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

The idea behind Simt Tax Managed Smallmid and Simt Real Return 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.