Correlation Between Royce Micro and Simt Managed

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

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

Diversification Opportunities for Royce Micro and Simt Managed

0.41

Correlation Coefficient

Royce Micro  Simt Managed

Very weak diversification

The 3 months correlation between Royce and Simt is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Royce Micro Cap and Simt Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Managed Volatility and Royce Micro 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 Royce Micro Cap are associated (or correlated) with Simt 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 Managed Volatility has no effect on the direction of Royce Micro i.e., Royce Micro and Simt Managed go up and down completely randomly.

Pair Corralation between Royce Micro and Simt Managed

Considering the 90-day investment horizon Royce Micro Cap is expected to under-perform the Simt Managed. In addition to that, Royce Micro is 2.81 times more volatile than Simt Managed Volatility. It trades about -0.02 of its total potential returns per unit of risk. Simt Managed Volatility is currently generating about -0.06 per unit of volatility. If you would invest  1,500  in Simt Managed Volatility on August 26, 2025 and sell it today you would lose (25.00) from holding Simt Managed Volatility or give up 1.67% of portfolio value over 90 days.

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

Royce Micro Cap  vs.  Simt Managed Volatility

Royce Micro Cap

Risk-Adjusted Performance

Weakest

Over the last 90 days Royce Micro Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Royce Micro is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Simt Managed Volatility

Risk-Adjusted Performance

Weakest

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

Pair Trading with Royce Micro and Simt Managed

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

The idea behind Royce Micro Cap and Simt Managed Volatility 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.