Correlation Between Financials Ultrasector and Simt Dynamic

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

By analyzing existing cross correlation between Financials Ultrasector Profund and Simt Dynamic Asset, you can compare the effects of market volatilities on Financials Ultrasector and Simt Dynamic 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 Financials Ultrasector with a short position of Simt Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Simt Dynamic.

Diversification Opportunities for Financials Ultrasector and Simt Dynamic

0.96

Correlation Coefficient

Financials Ultrasector  Simt Dynamic

Almost no diversification

The 3 months correlation between Financials and Simt is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Simt Dynamic Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Dynamic Asset and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Simt Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Dynamic Asset has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Simt Dynamic go up and down completely randomly.

Pair Corralation between Financials Ultrasector and Simt Dynamic

Assuming the 90 days horizon Financials Ultrasector is expected to generate 1.14 times less return on investment than Simt Dynamic. In addition to that, Financials Ultrasector is 1.74 times more volatile than Simt Dynamic Asset. It trades about 0.2 of its total potential returns per unit of risk. Simt Dynamic Asset is currently generating about 0.4 per unit of volatility. If you would invest  1,522  in Simt Dynamic Asset on April 22, 2025 and sell it today you would earn a total of  301.00  from holding Simt Dynamic Asset or generate 19.78% return on investment over 90 days.

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

Financials Ultrasector Profund  vs.  Simt Dynamic Asset

Financials Ultrasector

Risk-Adjusted Performance

Good

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

Simt Dynamic Asset

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Dynamic Asset are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Dynamic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Financials Ultrasector and Simt Dynamic

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

The idea behind Financials Ultrasector Profund and Simt Dynamic Asset 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 Transaction History module to view history of all your transactions and understand their impact on performance.