Correlation Between Simt Mid and Keeley Mid

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

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

Diversification Opportunities for Simt Mid and Keeley Mid

0.85

Correlation Coefficient

Simt Mid  Keeley Mid

Very poor diversification

The 3 months correlation between Simt and Keeley is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Simt Mid Cap and Keeley Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keeley Mid Cap and Simt Mid 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 Mid Cap are associated (or correlated) with Keeley Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keeley Mid Cap has no effect on the direction of Simt Mid i.e., Simt Mid and Keeley Mid go up and down completely randomly.

Pair Corralation between Simt Mid and Keeley Mid

Assuming the 90 days horizon Simt Mid Cap is expected to under-perform the Keeley Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Simt Mid Cap is 1.04 times less risky than Keeley Mid. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Keeley Mid Cap is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,938  in Keeley Mid Cap on December 28, 2024 and sell it today you would lose (69.00) from holding Keeley Mid Cap or give up 2.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Simt Mid Cap  vs.  Keeley Mid Cap

Simt Mid Cap

Risk-Adjusted Performance

Very Weak

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

Keeley Mid Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Simt Mid and Keeley Mid

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

The idea behind Simt Mid Cap and Keeley 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.

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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 Valuation module to check real value of public entities based on technical and fundamental data.