Correlation Between Simt Global and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Simt Global and Absolute Convertible 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 Global and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Global Managed and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Simt Global and Absolute Convertible 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 Global with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Global and Absolute Convertible.
Diversification Opportunities for Simt Global and Absolute Convertible
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Simt and Absolute is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Simt Global Managed and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Simt Global 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 Global Managed are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Simt Global i.e., Simt Global and Absolute Convertible go up and down completely randomly.
Pair Corralation between Simt Global and Absolute Convertible
Assuming the 90 days horizon Simt Global Managed is expected to generate 9.43 times more return on investment than Absolute Convertible. However, Simt Global is 9.43 times more volatile than Absolute Convertible Arbitrage. It trades about 0.17 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.64 per unit of risk. If you would invest 1,029 in Simt Global Managed on September 1, 2024 and sell it today you would earn a total of 107.00 from holding Simt Global Managed or generate 10.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Simt Global Managed vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Simt Global Managed |
| Absolute Convertible |
Simt Global and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Global and Absolute Convertible
The main advantage of trading using opposite Simt Global and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Global position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Simt Global vs. Simt Multi Asset Accumulation | Simt Global vs. Simt Real Return | Simt Global vs. Simt Small Cap | Simt Global vs. Siit Screened World |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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