Correlation Between Simt Small and Stet Intermediate
Can any of the company-specific risk be diversified away by investing in both Simt Small and Stet Intermediate 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 Stet Intermediate 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 Stet Intermediate Term, you can compare the effects of market volatilities on Simt Small and Stet Intermediate 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 Stet Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Small and Stet Intermediate.
Diversification Opportunities for Simt Small and Stet Intermediate
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simt and Stet is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Simt Small Cap and Stet Intermediate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stet Intermediate Term 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 Stet Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stet Intermediate Term has no effect on the direction of Simt Small i.e., Simt Small and Stet Intermediate go up and down completely randomly.
Pair Corralation between Simt Small and Stet Intermediate
Assuming the 90 days horizon Simt Small Cap is expected to generate 7.6 times more return on investment than Stet Intermediate. However, Simt Small is 7.6 times more volatile than Stet Intermediate Term. It trades about 0.11 of its potential returns per unit of risk. Stet Intermediate Term is currently generating about 0.06 per unit of risk. If you would invest 3,191 in Simt Small Cap on August 28, 2024 and sell it today you would earn a total of 965.00 from holding Simt Small Cap or generate 30.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.52% |
| Values | Daily Returns |
Simt Small Cap vs. Stet Intermediate Term
Performance |
| Timeline |
| Simt Small Cap |
| Stet Intermediate Term |
Simt Small and Stet Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Small and Stet Intermediate
The main advantage of trading using opposite Simt Small and Stet Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Small position performs unexpectedly, Stet Intermediate 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 Stet Intermediate will offset losses from the drop in Stet Intermediate's long position.| Simt Small vs. T Rowe Price | Simt Small vs. California High Yield Municipal | Simt Small vs. The National Tax Free | Simt Small vs. T Rowe Price |
| Stet Intermediate vs. Sit International Equity | Stet Intermediate vs. Intermediate Taxamt Free Fund | Stet Intermediate vs. Goldman Sachs Short | Stet Intermediate 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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