Correlation Between Simt Tax-managed and Tax-free Conservative

Can any of the company-specific risk be diversified away by investing in both Simt Tax-managed and Tax-free Conservative 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 Tax-free Conservative 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 Tax Free Conservative, you can compare the effects of market volatilities on Simt Tax-managed and Tax-free Conservative 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 Tax-free Conservative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Tax-managed and Tax-free Conservative.

Diversification Opportunities for Simt Tax-managed and Tax-free Conservative

-0.66

Correlation Coefficient

Simt Tax-managed  Tax-free Conservative

Excellent diversification

The 3 months correlation between Simt and Tax-free is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Smallmid and Tax Free Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Free Conservative 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 Tax-free Conservative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Free Conservative has no effect on the direction of Simt Tax-managed i.e., Simt Tax-managed and Tax-free Conservative go up and down completely randomly.

Pair Corralation between Simt Tax-managed and Tax-free Conservative

Assuming the 90 days horizon Simt Tax-managed is expected to generate 1.26 times less return on investment than Tax-free Conservative. In addition to that, Simt Tax-managed is 22.98 times more volatile than Tax Free Conservative. It trades about 0.01 of its total potential returns per unit of risk. Tax Free Conservative is currently generating about 0.21 per unit of volatility. If you would invest  941.00  in Tax Free Conservative on November 20, 2024 and sell it today you would earn a total of  61.00  from holding Tax Free Conservative or generate 6.48% return on investment over 90 days.

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

Simt Tax Managed Smallmid  vs.  Tax Free Conservative

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Tax Free Conservative

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Free Conservative are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tax-free Conservative 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 Tax-free Conservative

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

The idea behind Simt Tax Managed Smallmid and Tax Free Conservative 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.