Correlation Between Simt Core and Simt Tax-managed

Can any of the company-specific risk be diversified away by investing in both Simt Core 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 Simt Core 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 Simt E Fixed and Simt Tax Managed Large, you can compare the effects of market volatilities on Simt Core 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 Simt Core with a short position of Simt Tax-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Core and Simt Tax-managed.

Diversification Opportunities for Simt Core and Simt Tax-managed

0.6

Correlation Coefficient

Simt Core  Simt Tax-managed

Poor diversification

The 3 months correlation between SIMT and Simt is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Simt E Fixed and Simt Tax Managed Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed 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 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 Simt Core i.e., Simt Core and Simt Tax-managed go up and down completely randomly.

Pair Corralation between Simt Core and Simt Tax-managed

Assuming the 90 days horizon Simt Core is expected to generate 1.19 times less return on investment than Simt Tax-managed. But when comparing it to its historical volatility, Simt E Fixed is 1.99 times less risky than Simt Tax-managed. It trades about 0.19 of its potential returns per unit of risk. Simt Tax Managed Large is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,530  in Simt Tax Managed Large on December 2, 2024 and sell it today you would earn a total of  106.00  from holding Simt Tax Managed Large or generate 3.0% return on investment over 90 days.

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

Simt E Fixed  vs.  Simt Tax Managed Large

Simt E Fixed

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simt E Fixed are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. 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 Tax Managed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simt Tax Managed Large has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Simt Core and Simt Tax-managed

The main advantage of trading using opposite Simt Core and Simt Tax-managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Core 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 Simt E Fixed and Simt Tax Managed Large 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.