Correlation Between Siit Screened and Simt Small

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

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

Diversification Opportunities for Siit Screened and Simt Small

0.04

Correlation Coefficient

Siit Screened  Simt Small

Significant diversification

The 3 months correlation between Siit and Simt is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Siit Screened World and Simt Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Small Cap and Siit Screened 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 Screened World are associated (or correlated) with Simt Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Small Cap has no effect on the direction of Siit Screened i.e., Siit Screened and Simt Small go up and down completely randomly.

Pair Corralation between Siit Screened and Simt Small

Assuming the 90 days horizon Siit Screened World is expected to generate 0.45 times more return on investment than Simt Small. However, Siit Screened World is 2.23 times less risky than Simt Small. It trades about 0.06 of its potential returns per unit of risk. Simt Small Cap is currently generating about -0.19 per unit of risk. If you would invest  1,127  in Siit Screened World on December 1, 2024 and sell it today you would earn a total of  28.00  from holding Siit Screened World or generate 2.48% return on investment over 90 days.

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

Siit Screened World  vs.  Simt Small Cap

Siit Screened World

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Screened World are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Siit Screened is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simt Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Siit Screened and Simt Small

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

The idea behind Siit Screened World and Simt Small 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.