Correlation Between Simt Managed and Simt Small

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

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

Diversification Opportunities for Simt Managed and Simt Small

0.83

Correlation Coefficient

Simt Managed  Simt Small

Very poor diversification

The 3 months correlation between Simt and Simt is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Simt Managed Volatility 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 Simt 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 Managed Volatility 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 Simt Managed i.e., Simt Managed and Simt Small go up and down completely randomly.

Pair Corralation between Simt Managed and Simt Small

Assuming the 90 days horizon Simt Managed Volatility is expected to under-perform the Simt Small. In addition to that, Simt Managed is 1.38 times more volatile than Simt Small Cap. It trades about -0.29 of its total potential returns per unit of risk. Simt Small Cap is currently generating about -0.28 per unit of volatility. If you would invest  3,733  in Simt Small Cap on October 10, 2024 and sell it today you would lose (446.00) from holding Simt Small Cap or give up 11.95% of portfolio value over 90 days.

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

Simt Managed Volatility  vs.  Simt Small Cap

Simt Managed Volatility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simt Managed Volatility 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 February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Simt Small Cap

Risk-Adjusted Performance

0 of 100

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 fairly strong forward indicators, Simt 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 Managed and Simt Small

The main advantage of trading using opposite Simt Managed and Simt Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Managed 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 Simt Managed Volatility 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.