Correlation Between Small Cap and Simt Small
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and Simt Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Simt Small Cap, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of Simt Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Simt Small.
Diversification Opportunities for Small Cap and Simt Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Simt is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock 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 Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and Simt Small go up and down completely randomly.
Pair Corralation between Small Cap and Simt Small
Assuming the 90 days horizon Small Cap is expected to generate 1.16 times less return on investment than Simt Small. In addition to that, Small Cap is 1.09 times more volatile than Simt Small Cap. It trades about 0.23 of its total potential returns per unit of risk. Simt Small Cap is currently generating about 0.29 per unit of volatility. If you would invest 3,762 in Simt Small Cap on August 29, 2024 and sell it today you would earn a total of 388.00 from holding Simt Small Cap or generate 10.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Small Cap Stock vs. Simt Small Cap
Performance |
| Timeline |
| Small Cap Stock |
| Simt Small Cap |
Small Cap and Simt Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Simt Small
The main advantage of trading using opposite Small Cap and Simt Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Franklin Adjustable Government | Small Cap vs. Dreyfus Government Cash | Small Cap vs. Lord Abbett Government | Small Cap vs. Inverse Government Long |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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