Correlation Between Simt Managed and Walden Asset

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

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

Diversification Opportunities for Simt Managed and Walden Asset

0.67

Correlation Coefficient

Simt Managed  Walden Asset

Poor diversification

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

Pair Corralation between Simt Managed and Walden Asset

Assuming the 90 days horizon Simt Managed Volatility is expected to under-perform the Walden Asset. In addition to that, Simt Managed is 2.63 times more volatile than Walden Asset Management. It trades about -0.22 of its total potential returns per unit of risk. Walden Asset Management is currently generating about -0.14 per unit of volatility. If you would invest  2,351  in Walden Asset Management on September 19, 2024 and sell it today you would lose (78.00) from holding Walden Asset Management or give up 3.32% of portfolio value over 90 days.

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

Simt Managed Volatility  vs.  Walden Asset Management

Simt Managed Volatility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Managed Volatility has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Walden Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walden Asset Management has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Walden Asset 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 Managed and Walden Asset

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

The idea behind Simt Managed Volatility and Walden Asset Management 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.