Correlation Between Siit Large and Simt Tax

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

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

Diversification Opportunities for Siit Large and Simt Tax

0.96

Correlation Coefficient

Siit Large  Simt Tax

Almost no diversification

The 3 months correlation between SIIT and Simt is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Siit Large Cap and Simt Tax Managed Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed and Siit Large 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 Siit Large Cap are associated (or correlated) with Simt Tax. 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 Siit Large i.e., Siit Large and Simt Tax go up and down completely randomly.

Pair Corralation between Siit Large and Simt Tax

Assuming the 90 days horizon Siit Large Cap is expected to generate 0.73 times more return on investment than Simt Tax. However, Siit Large Cap is 1.37 times less risky than Simt Tax. It trades about 0.1 of its potential returns per unit of risk. Simt Tax Managed Smallmid is currently generating about 0.06 per unit of risk. If you would invest  892.00  in Siit Large Cap on September 3, 2024 and sell it today you would earn a total of  414.00  from holding Siit Large Cap or generate 46.41% return on investment over 90 days.

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

Siit Large Cap  vs.  Simt Tax Managed Smallmid

Siit Large Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Large Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Siit Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simt Tax Managed

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Smallmid are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Tax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siit Large and Simt Tax

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

The idea behind Siit Large Cap and Simt Tax Managed Smallmid 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.