Correlation Between Simt Sp and Simt High

Can any of the company-specific risk be diversified away by investing in both Simt Sp and Simt High 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 Simt High 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 Simt High Yield, you can compare the effects of market volatilities on Simt Sp and Simt High 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 Simt High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Sp and Simt High.

Diversification Opportunities for Simt Sp and Simt High

0.97

Correlation Coefficient

Simt Sp  Simt High

Almost no diversification

The 3 months correlation between Simt and Simt is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Simt Sp 500 and Simt High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt High Yield 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 Simt High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt High Yield has no effect on the direction of Simt Sp i.e., Simt Sp and Simt High go up and down completely randomly.

Pair Corralation between Simt Sp and Simt High

Assuming the 90 days horizon Simt Sp 500 is expected to generate 3.65 times more return on investment than Simt High. However, Simt Sp is 3.65 times more volatile than Simt High Yield. It trades about 0.33 of its potential returns per unit of risk. Simt High Yield is currently generating about 0.34 per unit of risk. If you would invest  8,774  in Simt Sp 500 on April 24, 2025 and sell it today you would earn a total of  1,425  from holding Simt Sp 500 or generate 16.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Simt Sp 500  vs.  Simt High Yield

Simt Sp 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Sp 500 are ranked lower than 26 (%) 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.

Simt High Yield

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Simt High Yield are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt High 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 Sp and Simt High

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

The idea behind Simt Sp 500 and Simt High Yield 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.