Correlation Between Conservative Allocation and Simt High

Can any of the company-specific risk be diversified away by investing in both Conservative Allocation and Simt High 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 Conservative Allocation and Simt High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Conservative Allocation Fund and Simt High Yield, you can compare the effects of market volatilities on Conservative Allocation and Simt High 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 Conservative Allocation with a short position of Simt High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conservative Allocation and Simt High.

Diversification Opportunities for Conservative Allocation and Simt High

0.64

Correlation Coefficient

Conservative Allocation  Simt High

Poor diversification

The 3 months correlation between Conservative and Simt is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Conservative Allocation Fund and Simt High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt High Yield and Conservative Allocation 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 Conservative Allocation Fund are associated (or correlated) with Simt High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt High Yield has no effect on the direction of Conservative Allocation i.e., Conservative Allocation and Simt High go up and down completely randomly.

Pair Corralation between Conservative Allocation and Simt High

Assuming the 90 days horizon Conservative Allocation Fund is expected to under-perform the Simt High. In addition to that, Conservative Allocation is 4.45 times more volatile than Simt High Yield. It trades about -0.32 of its total potential returns per unit of risk. Simt High Yield is currently generating about -0.21 per unit of volatility. If you would invest  521.00  in Simt High Yield on October 9, 2024 and sell it today you would lose (4.00) from holding Simt High Yield or give up 0.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Conservative Allocation Fund  vs.  Simt High Yield

Conservative Allocation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Conservative Allocation Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Conservative Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt High Yield

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simt High Yield are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Conservative Allocation and Simt High

The main advantage of trading using opposite Conservative Allocation and Simt High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conservative Allocation position performs unexpectedly, Simt High 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 High will offset losses from the drop in Simt High's long position.

The idea behind Conservative Allocation Fund and Simt High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..