Correlation Between Simt Multi and Diversified Municipal

Can any of the company-specific risk be diversified away by investing in both Simt Multi and Diversified Municipal 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 and Diversified Municipal 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 Diversified Municipal Portfolio, you can compare the effects of market volatilities on Simt Multi and Diversified Municipal 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 with a short position of Diversified Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Multi and Diversified Municipal.

Diversification Opportunities for Simt Multi and Diversified Municipal

0.51

Correlation Coefficient

Simt Multi  Diversified Municipal

Very weak diversification

The 3 months correlation between Simt and Diversified is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Asset Inflation and Diversified Municipal Portfoli in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Municipal and Simt Multi 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 Diversified Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Municipal has no effect on the direction of Simt Multi i.e., Simt Multi and Diversified Municipal go up and down completely randomly.

Pair Corralation between Simt Multi and Diversified Municipal

Assuming the 90 days horizon Simt Multi is expected to generate 1.05 times less return on investment than Diversified Municipal. In addition to that, Simt Multi is 1.71 times more volatile than Diversified Municipal Portfolio. It trades about 0.08 of its total potential returns per unit of risk. Diversified Municipal Portfolio is currently generating about 0.15 per unit of volatility. If you would invest  1,322  in Diversified Municipal Portfolio on September 14, 2024 and sell it today you would earn a total of  74.00  from holding Diversified Municipal Portfolio or generate 5.6% return on investment over 90 days.

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

Simt Multi Asset Inflation  vs.  Diversified Municipal Portfoli

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 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Diversified Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diversified Municipal Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Diversified Municipal 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 and Diversified Municipal

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

The idea behind Simt Multi Asset Inflation and Diversified Municipal Portfolio 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.