Correlation Between Simt Sp and Simt Small
Can any of the company-specific risk be diversified away by investing in both Simt Sp and Simt Small 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 Small 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 Small Cap, you can compare the effects of market volatilities on Simt Sp and Simt Small 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 Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Sp and Simt Small.
Diversification Opportunities for Simt Sp and Simt Small
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simt and Simt is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Simt Sp 500 and Simt Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Small Cap has no effect on the direction of Simt Sp i.e., Simt Sp and Simt Small go up and down completely randomly.
Pair Corralation between Simt Sp and Simt Small
Assuming the 90 days horizon Simt Sp 500 is expected to generate 0.72 times more return on investment than Simt Small. However, Simt Sp 500 is 1.39 times less risky than Simt Small. It trades about 0.23 of its potential returns per unit of risk. Simt Small Cap is currently generating about 0.08 per unit of risk. If you would invest 9,352 in Simt Sp 500 on May 11, 2025 and sell it today you would earn a total of 898.00 from holding Simt Sp 500 or generate 9.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Simt Sp 500 vs. Simt Small Cap
Performance |
Timeline |
Simt Sp 500 |
Simt Small Cap |
Simt Sp and Simt Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Simt Sp and Simt Small
The main advantage of trading using opposite Simt Sp and Simt Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Sp position performs unexpectedly, Simt Small 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 Small will offset losses from the drop in Simt Small's long position.Simt Sp vs. Simt Small Cap | Simt Sp vs. Simt Small Cap | Simt Sp vs. Simt Large Cap | Simt Sp vs. Sit International Equity |
Simt Small vs. Janus High Yield Fund | Simt Small vs. Msift High Yield | Simt Small vs. Virtus High Yield | Simt Small vs. City National Rochdale |
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.
Other Complementary Tools
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |