Correlation Between Intermediate Government and Simt Tax-managed

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

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

Diversification Opportunities for Intermediate Government and Simt Tax-managed

0.67

Correlation Coefficient

Intermediate Government  Simt Tax-managed

Poor diversification

The 3 months correlation between Intermediate and Simt is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Government Bond and Simt Tax Managed Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed and Intermediate Government 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 Intermediate Government Bond are associated (or correlated) with Simt Tax-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Intermediate Government i.e., Intermediate Government and Simt Tax-managed go up and down completely randomly.

Pair Corralation between Intermediate Government and Simt Tax-managed

Assuming the 90 days horizon Intermediate Government is expected to generate 19.34 times less return on investment than Simt Tax-managed. But when comparing it to its historical volatility, Intermediate Government Bond is 8.39 times less risky than Simt Tax-managed. It trades about 0.09 of its potential returns per unit of risk. Simt Tax Managed Smallmid is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,082  in Simt Tax Managed Smallmid on April 25, 2025 and sell it today you would earn a total of  267.00  from holding Simt Tax Managed Smallmid or generate 12.82% return on investment over 90 days.

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

Intermediate Government Bond  vs.  Simt Tax Managed Smallmid

Intermediate Government

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Government Bond are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Intermediate Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Tax Managed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Smallmid are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Tax-managed showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intermediate Government and Simt Tax-managed

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

The idea behind Intermediate Government Bond and Simt Tax Managed Smallmid 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.