Correlation Between Simt Large and Vanguard Developed

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

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

Diversification Opportunities for Simt Large and Vanguard Developed

0.91

Correlation Coefficient

Simt Large  Vanguard Developed

Almost no diversification

The 3 months correlation between SIMT and Vanguard is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Simt Large Cap and Vanguard Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Developed and Simt Large 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 Large Cap are associated (or correlated) with Vanguard Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Developed has no effect on the direction of Simt Large i.e., Simt Large and Vanguard Developed go up and down completely randomly.

Pair Corralation between Simt Large and Vanguard Developed

Assuming the 90 days horizon Simt Large Cap is expected to generate 1.0 times more return on investment than Vanguard Developed. However, Simt Large Cap is 1.0 times less risky than Vanguard Developed. It trades about 0.26 of its potential returns per unit of risk. Vanguard Developed Markets is currently generating about 0.18 per unit of risk. If you would invest  4,354  in Simt Large Cap on May 21, 2025 and sell it today you would earn a total of  535.00  from holding Simt Large Cap or generate 12.29% return on investment over 90 days.

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

Simt Large Cap  vs.  Vanguard Developed Markets

Simt Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Large Cap are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Large may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vanguard Developed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Developed Markets are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Developed may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Simt Large and Vanguard Developed

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

The idea behind Simt Large Cap and Vanguard Developed Markets 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.