Correlation Between Simt Multi-strategy and Touchstone Small
Can any of the company-specific risk be diversified away by investing in both Simt Multi-strategy and Touchstone Small 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 Multi-strategy and Touchstone Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Multi Strategy Alternative and Touchstone Small Cap, you can compare the effects of market volatilities on Simt Multi-strategy and Touchstone Small 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 Multi-strategy with a short position of Touchstone Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Multi-strategy and Touchstone Small.
Diversification Opportunities for Simt Multi-strategy and Touchstone Small
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simt and Touchstone is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Strategy Alternativ and Touchstone Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone Small Cap and Simt Multi-strategy 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 Multi Strategy Alternative are associated (or correlated) with Touchstone Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone Small Cap has no effect on the direction of Simt Multi-strategy i.e., Simt Multi-strategy and Touchstone Small go up and down completely randomly.
Pair Corralation between Simt Multi-strategy and Touchstone Small
Assuming the 90 days horizon Simt Multi-strategy is expected to generate 1.9 times less return on investment than Touchstone Small. But when comparing it to its historical volatility, Simt Multi Strategy Alternative is 4.62 times less risky than Touchstone Small. It trades about 0.13 of its potential returns per unit of risk. Touchstone Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,245 in Touchstone Small Cap on September 3, 2024 and sell it today you would earn a total of 932.00 from holding Touchstone Small Cap or generate 28.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Multi Strategy Alternativ vs. Touchstone Small Cap
Performance |
| Timeline |
| Simt Multi Strategy |
| Touchstone Small Cap |
Simt Multi-strategy and Touchstone Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Multi-strategy and Touchstone Small
The main advantage of trading using opposite Simt Multi-strategy and Touchstone Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Multi-strategy position performs unexpectedly, Touchstone Small 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 Touchstone Small will offset losses from the drop in Touchstone Small's long position.| Simt Multi-strategy vs. Touchstone Small Cap | Simt Multi-strategy vs. Qs Small Capitalization | Simt Multi-strategy vs. Small Midcap Dividend Income | Simt Multi-strategy vs. Kinetics Small Cap |
| Touchstone Small vs. Vanguard Small Cap Value | Touchstone Small vs. Vanguard Small Cap Value | Touchstone Small vs. Us Small Cap | Touchstone Small vs. Us Targeted Value |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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