Correlation Between Siit Small and Simt Mid

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

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

Diversification Opportunities for Siit Small and Simt Mid

0.99

Correlation Coefficient

Siit Small  Simt Mid

No risk reduction

The 3 months correlation between Siit and Simt is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Siit Small Mid and Simt Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Mid Cap and Siit Small 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 Small Mid are associated (or correlated) with Simt Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Mid Cap has no effect on the direction of Siit Small i.e., Siit Small and Simt Mid go up and down completely randomly.

Pair Corralation between Siit Small and Simt Mid

Assuming the 90 days horizon Siit Small is expected to generate 1.03 times less return on investment than Simt Mid. In addition to that, Siit Small is 1.35 times more volatile than Simt Mid Cap. It trades about 0.17 of its total potential returns per unit of risk. Simt Mid Cap is currently generating about 0.23 per unit of volatility. If you would invest  3,120  in Simt Mid Cap on September 3, 2024 and sell it today you would earn a total of  361.00  from holding Simt Mid Cap or generate 11.57% return on investment over 90 days.

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

Siit Small Mid  vs.  Simt Mid Cap

Siit Small Mid

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Small Mid are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Siit Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simt Mid Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Mid Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Simt Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siit Small and Simt Mid

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

The idea behind Siit Small Mid and Simt 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 Stocks Directory module to find actively traded stocks across global markets.