Correlation Between Simt Sp and Select Fund

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

By analyzing existing cross correlation between Simt Sp 500 and Select Fund R, you can compare the effects of market volatilities on Simt Sp and Select Fund 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 Sp with a short position of Select Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Sp and Select Fund.

Diversification Opportunities for Simt Sp and Select Fund

1.0

Correlation Coefficient

Simt Sp  Select Fund

No risk reduction

The 3 months correlation between Simt and Select is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Simt Sp 500 and Select Fund R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund R and Simt Sp 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 Sp 500 are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund R has no effect on the direction of Simt Sp i.e., Simt Sp and Select Fund go up and down completely randomly.

Pair Corralation between Simt Sp and Select Fund

Assuming the 90 days horizon Simt Sp is expected to generate 1.26 times less return on investment than Select Fund. But when comparing it to its historical volatility, Simt Sp 500 is 1.32 times less risky than Select Fund. It trades about 0.37 of its potential returns per unit of risk. Select Fund R is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  9,375  in Select Fund R on April 22, 2025 and sell it today you would earn a total of  2,332  from holding Select Fund R or generate 24.87% return on investment over 90 days.

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

Simt Sp 500  vs.  Select Fund R

Simt Sp 500

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Sp 500 are ranked lower than 28 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Simt Sp showed solid returns over the last few months and may actually be approaching a breakup point.

Select Fund R

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Select Fund R are ranked lower than 27 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Select Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simt Sp and Select Fund

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

The idea behind Simt Sp 500 and Select Fund R 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.