Correlation Between Vanguard Total and Simt Tax

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

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

Diversification Opportunities for Vanguard Total and Simt Tax

0.98

Correlation Coefficient

Vanguard Total  Simt Tax

Almost no diversification

The 3 months correlation between Vanguard and Simt is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Stock and Simt Tax Managed Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed and Vanguard Total 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 Vanguard Total Stock are associated (or correlated) with Simt Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Vanguard Total i.e., Vanguard Total and Simt Tax go up and down completely randomly.

Pair Corralation between Vanguard Total and Simt Tax

Assuming the 90 days horizon Vanguard Total Stock is expected to generate 1.11 times more return on investment than Simt Tax. However, Vanguard Total is 1.11 times more volatile than Simt Tax Managed Large. It trades about 0.21 of its potential returns per unit of risk. Simt Tax Managed Large is currently generating about 0.23 per unit of risk. If you would invest  13,454  in Vanguard Total Stock on May 4, 2025 and sell it today you would earn a total of  1,437  from holding Vanguard Total Stock or generate 10.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

Vanguard Total Stock  vs.  Simt Tax Managed Large

Vanguard Total Stock

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Vanguard Total may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Simt Tax Managed

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Large 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 Tax may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vanguard Total and Simt Tax

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

The idea behind Vanguard Total Stock and Simt Tax Managed Large 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.