Correlation Between Simt Large and Simt Small
Can any of the company-specific risk be diversified away by investing in both Simt Large and Simt 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 Large and Simt Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Large Cap and Simt Small Cap, you can compare the effects of market volatilities on Simt Large and Simt 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 Large with a short position of Simt Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Large and Simt Small.
Diversification Opportunities for Simt Large and Simt Small
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simt and Simt is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Simt Large Cap and Simt Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Small Cap and Simt Large 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 Large Cap are associated (or correlated) with Simt Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Small Cap has no effect on the direction of Simt Large i.e., Simt Large and Simt Small go up and down completely randomly.
Pair Corralation between Simt Large and Simt Small
Assuming the 90 days horizon Simt Large is expected to generate 1.24 times less return on investment than Simt Small. But when comparing it to its historical volatility, Simt Large Cap is 1.73 times less risky than Simt Small. It trades about 0.11 of its potential returns per unit of risk. Simt Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,482 in Simt Small Cap on August 29, 2024 and sell it today you would earn a total of 645.00 from holding Simt Small Cap or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Large Cap vs. Simt Small Cap
Performance |
| Timeline |
| Simt Large Cap |
| Simt Small Cap |
Simt Large and Simt Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Large and Simt Small
The main advantage of trading using opposite Simt Large and Simt Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Large position performs unexpectedly, Simt 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 Simt Small will offset losses from the drop in Simt Small's long position.| Simt Large vs. Ultra Short Fixed Income | Simt Large vs. Multisector Bond Sma | Simt Large vs. California Bond Fund | Simt Large vs. Bbh Intermediate Municipal |
| Simt Small vs. Pace Large Growth | Simt Small vs. Goldman Sachs Large | Simt Small vs. Hartford Moderate Allocation | Simt Small vs. T Rowe Price |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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