Correlation Between Simt Small and Simt Managed

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

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

Diversification Opportunities for Simt Small and Simt Managed

0.94

Correlation Coefficient

Simt Small  Simt Managed

Almost no diversification

The 3 months correlation between Simt and Simt is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Simt Small 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 Simt Small 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 Small 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 Simt Small i.e., Simt Small and Simt Managed go up and down completely randomly.

Pair Corralation between Simt Small and Simt Managed

Assuming the 90 days horizon Simt Small Cap is expected to generate 1.56 times more return on investment than Simt Managed. However, Simt Small is 1.56 times more volatile than Simt Managed Volatility. It trades about 0.16 of its potential returns per unit of risk. Simt Managed Volatility is currently generating about 0.14 per unit of risk. If you would invest  3,162  in Simt Small Cap on April 29, 2025 and sell it today you would earn a total of  319.00  from holding Simt Small Cap or generate 10.09% return on investment over 90 days.

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

Simt Small Cap  vs.  Simt Managed Volatility

Simt Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Simt Small may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Simt Managed Volatility

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Managed Volatility are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. 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 Simt Small and Simt Managed

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

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.