Correlation Between Simt Multi-asset and Small-midcap Dividend

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

By analyzing existing cross correlation between Simt Multi Asset Inflation and Small Midcap Dividend Income, you can compare the effects of market volatilities on Simt Multi-asset and Small-midcap Dividend 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 Multi-asset with a short position of Small-midcap Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Multi-asset and Small-midcap Dividend.

Diversification Opportunities for Simt Multi-asset and Small-midcap Dividend

0.42

Correlation Coefficient

Simt Multi-asset  Small-midcap Dividend

Very weak diversification

The 3 months correlation between Simt and Small-midcap is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Asset Inflation and Small Midcap Dividend Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Midcap Dividend and Simt Multi-asset 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 Multi Asset Inflation are associated (or correlated) with Small-midcap Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Midcap Dividend has no effect on the direction of Simt Multi-asset i.e., Simt Multi-asset and Small-midcap Dividend go up and down completely randomly.

Pair Corralation between Simt Multi-asset and Small-midcap Dividend

Assuming the 90 days horizon Simt Multi Asset Inflation is expected to under-perform the Small-midcap Dividend. But the mutual fund apears to be less risky and, when comparing its historical volatility, Simt Multi Asset Inflation is 2.25 times less risky than Small-midcap Dividend. The mutual fund trades about -0.16 of its potential returns per unit of risk. The Small Midcap Dividend Income is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,892  in Small Midcap Dividend Income on October 6, 2024 and sell it today you would lose (75.00) from holding Small Midcap Dividend Income or give up 3.96% of portfolio value over 90 days.

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

Simt Multi Asset Inflation  vs.  Small Midcap Dividend Income

Simt Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Small Midcap Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Small Midcap Dividend Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Small-midcap Dividend 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 Multi-asset and Small-midcap Dividend

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

The idea behind Simt Multi Asset Inflation and Small Midcap Dividend Income 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.