Correlation Between Simt High and Simt Large
Can any of the company-specific risk be diversified away by investing in both Simt High and Simt Large 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 Large 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 Large Cap, you can compare the effects of market volatilities on Simt High and Simt Large 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 Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt High and Simt Large.
Diversification Opportunities for Simt High and Simt Large
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simt and Simt is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Simt High Yield and Simt Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Large 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 Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Large Cap has no effect on the direction of Simt High i.e., Simt High and Simt Large go up and down completely randomly.
Pair Corralation between Simt High and Simt Large
Assuming the 90 days horizon Simt High is expected to generate 22.29 times less return on investment than Simt Large. But when comparing it to its historical volatility, Simt High Yield is 4.96 times less risky than Simt Large. It trades about 0.05 of its potential returns per unit of risk. Simt Large Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,684 in Simt Large Cap on August 25, 2024 and sell it today you would earn a total of 71.00 from holding Simt Large Cap or generate 4.22% 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 Large Cap
Performance |
| Timeline |
| Simt High Yield |
| Simt Large Cap |
Simt High and Simt Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt High and Simt Large
The main advantage of trading using opposite Simt High and Simt Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt High position performs unexpectedly, Simt Large 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 Large will offset losses from the drop in Simt Large'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 Large vs. Simt Mid Cap | Simt Large vs. Saat Tax Managed Aggressive | Simt Large vs. Sit Emerging Markets | Simt Large vs. Simt High Yield |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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