Correlation Between Balanced Fund and Simt Multi

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

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

Diversification Opportunities for Balanced Fund and Simt Multi

0.58

Correlation Coefficient

Balanced Fund  Simt Multi

Very weak diversification

The 3 months correlation between Balanced and Simt is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Simt Multi Asset Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Multi Asset and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Simt Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Multi Asset has no effect on the direction of Balanced Fund i.e., Balanced Fund and Simt Multi go up and down completely randomly.

Pair Corralation between Balanced Fund and Simt Multi

Assuming the 90 days horizon Balanced Fund Investor is expected to generate 3.25 times more return on investment than Simt Multi. However, Balanced Fund is 3.25 times more volatile than Simt Multi Asset Capital. It trades about 0.09 of its potential returns per unit of risk. Simt Multi Asset Capital is currently generating about 0.03 per unit of risk. If you would invest  1,976  in Balanced Fund Investor on September 18, 2024 and sell it today you would earn a total of  50.00  from holding Balanced Fund Investor or generate 2.53% return on investment over 90 days.

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

Balanced Fund Investor  vs.  Simt Multi Asset Capital

Balanced Fund Investor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Multi Asset

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Multi Asset Capital are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Balanced Fund and Simt Multi

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

The idea behind Balanced Fund Investor and Simt Multi Asset Capital 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.