Correlation Between Simt Core and Simt Mid

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

By analyzing existing cross correlation between Simt E Fixed and Simt Mid Cap, you can compare the effects of market volatilities on Simt Core and Simt Mid 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 Core with a short position of Simt Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Core and Simt Mid.

Diversification Opportunities for Simt Core and Simt Mid

-0.71

Correlation Coefficient

Simt Core  Simt Mid

Pay attention - limited upside

The 3 months correlation between Simt and Simt is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Simt E Fixed and Simt Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Mid Cap and Simt Core 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 E Fixed are associated (or correlated) with Simt Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Mid Cap has no effect on the direction of Simt Core i.e., Simt Core and Simt Mid go up and down completely randomly.

Pair Corralation between Simt Core and Simt Mid

Assuming the 90 days horizon Simt E Fixed is expected to under-perform the Simt Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Simt E Fixed is 2.35 times less risky than Simt Mid. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Simt Mid Cap is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3,120  in Simt Mid Cap on September 3, 2024 and sell it today you would earn a total of  361.00  from holding Simt Mid Cap or generate 11.57% return on investment over 90 days.

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

Simt E Fixed  vs.  Simt Mid Cap

Simt E Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Simt Mid Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Mid Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Simt Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Simt Core and Simt Mid

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

The idea behind Simt E Fixed and Simt Mid Cap 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.