Correlation Between Microsoft and Simt Tax-managed

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

By analyzing existing cross correlation between Microsoft and Simt Tax Managed Managed, you can compare the effects of market volatilities on Microsoft and Simt Tax-managed 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 Microsoft with a short position of Simt Tax-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Simt Tax-managed.

Diversification Opportunities for Microsoft and Simt Tax-managed

0.35

Correlation Coefficient

Microsoft  Simt Tax-managed

Weak diversification

The 3 months correlation between Microsoft and SIMT is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Simt Tax Managed Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed and Microsoft 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 Microsoft are associated (or correlated) with Simt Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Microsoft i.e., Microsoft and Simt Tax-managed go up and down completely randomly.

Pair Corralation between Microsoft and Simt Tax-managed

Given the investment horizon of 90 days Microsoft is expected to generate 1.18 times more return on investment than Simt Tax-managed. However, Microsoft is 1.18 times more volatile than Simt Tax Managed Managed. It trades about 0.08 of its potential returns per unit of risk. Simt Tax Managed Managed is currently generating about 0.0 per unit of risk. If you would invest  24,470  in Microsoft on November 29, 2024 and sell it today you would earn a total of  14,783  from holding Microsoft or generate 60.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Microsoft  vs.  Simt Tax Managed Managed

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Simt Tax Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simt Tax Managed Managed 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 March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Microsoft and Simt Tax-managed

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

The idea behind Microsoft and Simt Tax Managed Managed 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.