Correlation Between Simt Tax and Stet Short

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

By analyzing existing cross correlation between Simt Tax Managed Large and Stet Short Duration, you can compare the effects of market volatilities on Simt Tax and Stet Short 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 Stet Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Tax and Stet Short.

Diversification Opportunities for Simt Tax and Stet Short

0.5

Correlation Coefficient

Simt Tax  Stet Short

Very weak diversification

The 3 months correlation between Simt and Stet is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Large and Stet Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet Short Duration 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 Large are associated (or correlated) with Stet Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet Short Duration has no effect on the direction of Simt Tax i.e., Simt Tax and Stet Short go up and down completely randomly.

Pair Corralation between Simt Tax and Stet Short

Assuming the 90 days horizon Simt Tax Managed Large is expected to generate 7.41 times more return on investment than Stet Short. However, Simt Tax is 7.41 times more volatile than Stet Short Duration. It trades about 0.1 of its potential returns per unit of risk. Stet Short Duration is currently generating about 0.02 per unit of risk. If you would invest  3,792  in Simt Tax Managed Large on September 18, 2024 and sell it today you would earn a total of  149.00  from holding Simt Tax Managed Large or generate 3.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Simt Tax Managed Large  vs.  Stet Short Duration

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 Large are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Simt Tax is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stet Short Duration

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stet Short Duration are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stet Short 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 Stet Short

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

The idea behind Simt Tax Managed Large and Stet Short Duration 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.