Correlation Between Simt Small and Pace Large
Can any of the company-specific risk be diversified away by investing in both Simt Small and Pace 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 Small and Pace Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Small Cap and Pace Large Growth, you can compare the effects of market volatilities on Simt Small and Pace 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 Small with a short position of Pace Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Small and Pace Large.
Diversification Opportunities for Simt Small and Pace Large
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simt and Pace is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Simt Small Cap and Pace Large Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Large Growth and Simt Small 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 Small Cap are associated (or correlated) with Pace Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Large Growth has no effect on the direction of Simt Small i.e., Simt Small and Pace Large go up and down completely randomly.
Pair Corralation between Simt Small and Pace Large
Assuming the 90 days horizon Simt Small Cap is expected to generate 1.27 times more return on investment than Pace Large. However, Simt Small is 1.27 times more volatile than Pace Large Growth. It trades about 0.11 of its potential returns per unit of risk. Pace Large Growth is currently generating about 0.11 per unit of risk. If you would invest 3,494 in Simt Small Cap on September 1, 2024 and sell it today you would earn a total of 652.00 from holding Simt Small Cap or generate 18.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Small Cap vs. Pace Large Growth
Performance |
| Timeline |
| Simt Small Cap |
| Pace Large Growth |
Simt Small and Pace Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Small and Pace Large
The main advantage of trading using opposite Simt Small and Pace Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Small position performs unexpectedly, Pace 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 Pace Large will offset losses from the drop in Pace Large's long position.| Simt Small vs. Old Westbury Large | Simt Small vs. Aqr Large Cap | Simt Small vs. Pace Large Growth | Simt Small vs. Morningstar Unconstrained Allocation |
| Pace Large vs. Dreyfus Institutional Reserves | Pace Large vs. T Rowe Price | Pace Large vs. Aig Government Money | Pace Large vs. Dws Government Money |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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