Correlation Between Simt Tax-managed and Siit Small

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

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

Diversification Opportunities for Simt Tax-managed and Siit Small

1.0

Correlation Coefficient

Simt Tax-managed  Siit Small

No risk reduction

The 3 months correlation between Simt and Siit is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Smallmid and Siit Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Small Cap and Simt Tax-managed 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 Tax Managed Smallmid are associated (or correlated) with Siit Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Small Cap has no effect on the direction of Simt Tax-managed i.e., Simt Tax-managed and Siit Small go up and down completely randomly.

Pair Corralation between Simt Tax-managed and Siit Small

Assuming the 90 days horizon Simt Tax Managed Smallmid is expected to generate 0.94 times more return on investment than Siit Small. However, Simt Tax Managed Smallmid is 1.06 times less risky than Siit Small. It trades about -0.08 of its potential returns per unit of risk. Siit Small Cap is currently generating about -0.09 per unit of risk. If you would invest  2,316  in Simt Tax Managed Smallmid on December 27, 2024 and sell it today you would lose (128.00) from holding Simt Tax Managed Smallmid or give up 5.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Simt Tax Managed Smallmid  vs.  Siit Small Cap

Simt Tax Managed

Risk-Adjusted Performance

Very Weak

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

Siit Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siit Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Siit Small 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 Tax-managed and Siit Small

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

The idea behind Simt Tax Managed Smallmid and Siit 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.