Correlation Between Simt Sp and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both Simt Sp and Emerald Growth 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 Sp and Emerald Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Sp 500 and Emerald Growth Fund, you can compare the effects of market volatilities on Simt Sp and Emerald Growth 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 Sp with a short position of Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Sp and Emerald Growth.
Diversification Opportunities for Simt Sp and Emerald Growth
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simt and Emerald is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Simt Sp 500 and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth and Simt Sp 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 Sp 500 are associated (or correlated) with Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Simt Sp i.e., Simt Sp and Emerald Growth go up and down completely randomly.
Pair Corralation between Simt Sp and Emerald Growth
Assuming the 90 days horizon Simt Sp 500 is expected to generate 0.55 times more return on investment than Emerald Growth. However, Simt Sp 500 is 1.81 times less risky than Emerald Growth. It trades about 0.13 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.07 per unit of risk. If you would invest 9,476 in Simt Sp 500 on August 29, 2024 and sell it today you would earn a total of 1,331 from holding Simt Sp 500 or generate 14.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Sp 500 vs. Emerald Growth Fund
Performance |
| Timeline |
| Simt Sp 500 |
| Emerald Growth |
Simt Sp and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Sp and Emerald Growth
The main advantage of trading using opposite Simt Sp and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Sp position performs unexpectedly, Emerald Growth 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 Emerald Growth will offset losses from the drop in Emerald Growth's long position.| Simt Sp vs. Vanguard Total Stock | Simt Sp vs. Vanguard 500 Index | Simt Sp vs. Vanguard Total Stock | Simt Sp vs. Vanguard Total Stock |
| Emerald Growth vs. T Rowe Price | Emerald Growth vs. T Rowe Price | Emerald Growth vs. Fidelity Small Cap | Emerald Growth vs. Virtus Kar Small Cap |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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