Correlation Between Simt High and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both Simt High and Sp Smallcap 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 High and Sp Smallcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt High Yield and Sp Smallcap Index, you can compare the effects of market volatilities on Simt High and Sp Smallcap 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 High with a short position of Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt High and Sp Smallcap.
Diversification Opportunities for Simt High and Sp Smallcap
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simt and SMLKX is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Simt High Yield and Sp Smallcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap Index and Simt High 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 High Yield are associated (or correlated) with Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap Index has no effect on the direction of Simt High i.e., Simt High and Sp Smallcap go up and down completely randomly.
Pair Corralation between Simt High and Sp Smallcap
Assuming the 90 days horizon Simt High is expected to generate 1.71 times less return on investment than Sp Smallcap. But when comparing it to its historical volatility, Simt High Yield is 3.29 times less risky than Sp Smallcap. It trades about 0.23 of its potential returns per unit of risk. Sp Smallcap Index is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,094 in Sp Smallcap Index on October 23, 2024 and sell it today you would earn a total of 41.00 from holding Sp Smallcap Index or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt High Yield vs. Sp Smallcap Index
Performance |
| Timeline |
| Simt High Yield |
| Sp Smallcap Index |
Simt High and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt High and Sp Smallcap
The main advantage of trading using opposite Simt High and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt High position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap's long position.| Simt High vs. Forum Real Estate | Simt High vs. Short Real Estate | Simt High vs. Rems Real Estate | Simt High vs. Simt Real Estate |
| Sp Smallcap vs. Artisan High Income | Sp Smallcap vs. Simt High Yield | Sp Smallcap vs. Msift High Yield | Sp Smallcap vs. Lord Abbett Short |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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