Correlation Between Stet California and Simt Managed

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

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

Diversification Opportunities for Stet California and Simt Managed

0.7

Correlation Coefficient

Stet California  Simt Managed

Poor diversification

The 3 months correlation between Stet and Simt is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Stet California Municipal 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 Stet California 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 Stet California Municipal 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 Stet California i.e., Stet California and Simt Managed go up and down completely randomly.

Pair Corralation between Stet California and Simt Managed

Assuming the 90 days horizon Stet California Municipal is expected to generate 0.18 times more return on investment than Simt Managed. However, Stet California Municipal is 5.63 times less risky than Simt Managed. It trades about 0.32 of its potential returns per unit of risk. Simt Managed Volatility is currently generating about 0.05 per unit of risk. If you would invest  992.00  in Stet California Municipal on May 4, 2025 and sell it today you would earn a total of  22.00  from holding Stet California Municipal or generate 2.22% return on investment over 90 days.

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

Stet California Municipal  vs.  Simt Managed Volatility

Stet California Municipal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stet California Municipal are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stet California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Managed Volatility

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Managed Volatility are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Stet California and Simt Managed

The main advantage of trading using opposite Stet California and Simt Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stet California 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 Stet California Municipal 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.