Correlation Between Simt Tax-managed and Financials Ultrasector

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

By analyzing existing cross correlation between Simt Tax Managed Smallmid and Financials Ultrasector Profund, you can compare the effects of market volatilities on Simt Tax-managed and Financials Ultrasector 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 Tax-managed with a short position of Financials Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Tax-managed and Financials Ultrasector.

Diversification Opportunities for Simt Tax-managed and Financials Ultrasector

0.94

Correlation Coefficient

Simt Tax-managed  Financials Ultrasector

Almost no diversification

The 3 months correlation between Simt and Financials is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Smallmid and Financials Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financials Ultrasector and Simt Tax-managed 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 Tax Managed Smallmid are associated (or correlated) with Financials Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financials Ultrasector has no effect on the direction of Simt Tax-managed i.e., Simt Tax-managed and Financials Ultrasector go up and down completely randomly.

Pair Corralation between Simt Tax-managed and Financials Ultrasector

Assuming the 90 days horizon Simt Tax Managed Smallmid is expected to generate 0.75 times more return on investment than Financials Ultrasector. However, Simt Tax Managed Smallmid is 1.33 times less risky than Financials Ultrasector. It trades about 0.05 of its potential returns per unit of risk. Financials Ultrasector Profund is currently generating about 0.03 per unit of risk. If you would invest  2,243  in Simt Tax Managed Smallmid on May 13, 2025 and sell it today you would earn a total of  55.00  from holding Simt Tax Managed Smallmid or generate 2.45% return on investment over 90 days.

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

Simt Tax Managed Smallmid  vs.  Financials Ultrasector Profund

Simt Tax Managed

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Smallmid are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Tax-managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Financials Ultrasector

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financials Ultrasector Profund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Financials Ultrasector 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 Tax-managed and Financials Ultrasector

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

The idea behind Simt Tax Managed Smallmid and Financials Ultrasector Profund 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.