Correlation Between Simt High and Sierra Tactical
Can any of the company-specific risk be diversified away by investing in both Simt High and Sierra Tactical 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 Sierra Tactical 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 Sierra Tactical Municipal, you can compare the effects of market volatilities on Simt High and Sierra Tactical 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 Sierra Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt High and Sierra Tactical.
Diversification Opportunities for Simt High and Sierra Tactical
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simt and Sierra is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Simt High Yield and Sierra Tactical Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Municipal 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Municipal has no effect on the direction of Simt High i.e., Simt High and Sierra Tactical go up and down completely randomly.
Pair Corralation between Simt High and Sierra Tactical
Assuming the 90 days horizon Simt High Yield is expected to generate 0.76 times more return on investment than Sierra Tactical. However, Simt High Yield is 1.31 times less risky than Sierra Tactical. It trades about 0.21 of its potential returns per unit of risk. Sierra Tactical Municipal is currently generating about 0.01 per unit of risk. If you would invest 527.00 in Simt High Yield on August 28, 2024 and sell it today you would earn a total of 15.00 from holding Simt High Yield or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt High Yield vs. Sierra Tactical Municipal
Performance |
| Timeline |
| Simt High Yield |
| Sierra Tactical Municipal |
Simt High and Sierra Tactical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt High and Sierra Tactical
The main advantage of trading using opposite Simt High and Sierra Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt High position performs unexpectedly, Sierra Tactical 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 Sierra Tactical will offset losses from the drop in Sierra Tactical'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 |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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