Correlation Between Stet California and Simt E
Can any of the company-specific risk be diversified away by investing in both Stet California and Simt E 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 Stet California and Simt E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stet California Municipal and Simt E Fixed, you can compare the effects of market volatilities on Stet California and Simt E 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 Stet California with a short position of Simt E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stet California and Simt E.
Diversification Opportunities for Stet California and Simt E
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Stet and Simt is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Stet California Municipal and Simt E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt E Fixed and Stet California 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 Stet California Municipal are associated (or correlated) with Simt E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt E Fixed has no effect on the direction of Stet California i.e., Stet California and Simt E go up and down completely randomly.
Pair Corralation between Stet California and Simt E
Assuming the 90 days horizon Stet California Municipal is expected to under-perform the Simt E. But the mutual fund apears to be less risky and, when comparing its historical volatility, Stet California Municipal is 1.6 times less risky than Simt E. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Simt E Fixed is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 940.00 in Simt E Fixed on October 19, 2024 and sell it today you would lose (3.00) from holding Simt E Fixed or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stet California Municipal vs. Simt E Fixed
Performance |
| Timeline |
| Stet California Municipal |
| Simt E Fixed |
Stet California and Simt E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stet California and Simt E
The main advantage of trading using opposite Stet California and Simt E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stet California position performs unexpectedly, Simt E 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 E will offset losses from the drop in Simt E's long position.| Stet California vs. Simt Multi Asset Accumulation | Stet California vs. Saat Market Growth | Stet California vs. Simt Real Return | Stet California vs. Simt Small Cap |
| Simt E vs. Sit Emerging Markets | Simt E vs. Simt Multi Asset Income | Simt E vs. Sit International Equity | Simt E vs. Simt Global Managed |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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