Correlation Between Simt Multi-asset and Nasdaq-100(r)

Can any of the company-specific risk be diversified away by investing in both Simt Multi-asset and Nasdaq-100(r) 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 Nasdaq-100(r) 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 Nasdaq 100 2x Strategy, you can compare the effects of market volatilities on Simt Multi-asset and Nasdaq-100(r) 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 Nasdaq-100(r). Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Multi-asset and Nasdaq-100(r).

Diversification Opportunities for Simt Multi-asset and Nasdaq-100(r)

-0.01

Correlation Coefficient

Simt Multi-asset  Nasdaq-100(r)

Good diversification

The 3 months correlation between Simt and Nasdaq-100(r) is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Asset Inflation and Nasdaq 100 2x Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 2x 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 Nasdaq-100(r). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 2x has no effect on the direction of Simt Multi-asset i.e., Simt Multi-asset and Nasdaq-100(r) go up and down completely randomly.

Pair Corralation between Simt Multi-asset and Nasdaq-100(r)

Assuming the 90 days horizon Simt Multi-asset is expected to generate 314.0 times less return on investment than Nasdaq-100(r). But when comparing it to its historical volatility, Simt Multi Asset Inflation is 7.53 times less risky than Nasdaq-100(r). It trades about 0.0 of its potential returns per unit of risk. Nasdaq 100 2x Strategy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15,336  in Nasdaq 100 2x Strategy on October 6, 2024 and sell it today you would earn a total of  24,511  from holding Nasdaq 100 2x Strategy or generate 159.83% return on investment over 90 days.

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

Simt Multi Asset Inflation  vs.  Nasdaq 100 2x Strategy

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.

Nasdaq 100 2x

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 2x Strategy are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Nasdaq-100(r) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Simt Multi-asset and Nasdaq-100(r)

The main advantage of trading using opposite Simt Multi-asset and Nasdaq-100(r) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Multi-asset position performs unexpectedly, Nasdaq-100(r) 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 Nasdaq-100(r) will offset losses from the drop in Nasdaq-100(r)'s long position.

The idea behind Simt Multi Asset Inflation and Nasdaq 100 2x Strategy 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.