Correlation Between Simt High and Simt Mid
Can any of the company-specific risk be diversified away by investing in both Simt High and Simt Mid 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 Simt Mid 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 Simt Mid Cap, you can compare the effects of market volatilities on Simt High and Simt Mid 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 Simt Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt High and Simt Mid.
Diversification Opportunities for Simt High and Simt Mid
Poor diversification
The 3 months correlation between Simt and Simt is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Simt High Yield and Simt Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Mid Cap 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 Simt Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Mid Cap has no effect on the direction of Simt High i.e., Simt High and Simt Mid go up and down completely randomly.
Pair Corralation between Simt High and Simt Mid
Assuming the 90 days horizon Simt High is expected to generate 17.76 times less return on investment than Simt Mid. But when comparing it to its historical volatility, Simt High Yield is 5.79 times less risky than Simt Mid. It trades about 0.11 of its potential returns per unit of risk. Simt Mid Cap is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 3,225 in Simt Mid Cap on August 26, 2024 and sell it today you would earn a total of 218.00 from holding Simt Mid Cap or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt High Yield vs. Simt Mid Cap
Performance |
| Timeline |
| Simt High Yield |
| Simt Mid Cap |
Simt High and Simt Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt High and Simt Mid
The main advantage of trading using opposite Simt High and Simt Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt High position performs unexpectedly, Simt Mid 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 Mid will offset losses from the drop in Simt Mid's long position.| Simt High vs. Artisan High Income | Simt High vs. Sit Emerging Markets | Simt High vs. Sit International Equity | Simt High vs. Stet Intermediate Term |
| Simt Mid vs. Simt Mid Cap | Simt Mid vs. Victory Sycamore Established | Simt Mid vs. Jpmorgan Value Advantage | Simt Mid vs. Aquagold International |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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