Correlation Between Real Assets and Simt Multi

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

By analyzing existing cross correlation between Real Assets Portfolio and Simt Multi Asset Inflation, you can compare the effects of market volatilities on Real Assets and Simt Multi 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 Real Assets with a short position of Simt Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Real Assets and Simt Multi.

Diversification Opportunities for Real Assets and Simt Multi

0.47

Correlation Coefficient

Real Assets  Simt Multi

Very weak diversification

The 3 months correlation between Real and Simt is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Real Assets Portfolio and Simt Multi Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Multi Asset and Real Assets 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 Real Assets Portfolio are associated (or correlated) with Simt Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Multi Asset has no effect on the direction of Real Assets i.e., Real Assets and Simt Multi go up and down completely randomly.

Pair Corralation between Real Assets and Simt Multi

Assuming the 90 days horizon Real Assets Portfolio is expected to under-perform the Simt Multi. In addition to that, Real Assets is 2.8 times more volatile than Simt Multi Asset Inflation. It trades about -0.3 of its total potential returns per unit of risk. Simt Multi Asset Inflation is currently generating about -0.26 per unit of volatility. If you would invest  800.00  in Simt Multi Asset Inflation on October 4, 2024 and sell it today you would lose (33.00) from holding Simt Multi Asset Inflation or give up 4.12% of portfolio value over 90 days.

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

Real Assets Portfolio  vs.  Simt Multi Asset Inflation

Real Assets Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Assets Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Simt Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Real Assets and Simt Multi

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

The idea behind Real Assets Portfolio and Simt Multi Asset Inflation 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.

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.