Correlation Between Simt Large and Simt Sp

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

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

Diversification Opportunities for Simt Large and Simt Sp

0.99

Correlation Coefficient

Simt Large  Simt Sp

No risk reduction

The 3 months correlation between Simt and Simt is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Simt Large Cap and Simt Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Sp 500 and Simt Large 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 Large Cap are associated (or correlated) with Simt Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Sp 500 has no effect on the direction of Simt Large i.e., Simt Large and Simt Sp go up and down completely randomly.

Pair Corralation between Simt Large and Simt Sp

Assuming the 90 days horizon Simt Large is expected to generate 1.3 times less return on investment than Simt Sp. In addition to that, Simt Large is 1.07 times more volatile than Simt Sp 500. It trades about 0.23 of its total potential returns per unit of risk. Simt Sp 500 is currently generating about 0.32 per unit of volatility. If you would invest  8,895  in Simt Sp 500 on April 29, 2025 and sell it today you would earn a total of  1,354  from holding Simt Sp 500 or generate 15.22% return on investment over 90 days.

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

Simt Large Cap  vs.  Simt Sp 500

Simt Large Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Large Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Large may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 24 (%) 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.

Pair Trading with Simt Large and Simt Sp

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

The idea behind Simt Large Cap and Simt Sp 500 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.