Correlation Between Simt Multi-asset and Conservative Income

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

By analyzing existing cross correlation between Simt Multi Asset Accumulation and Conservative Income, you can compare the effects of market volatilities on Simt Multi-asset and Conservative Income 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 Multi-asset with a short position of Conservative Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Multi-asset and Conservative Income.

Diversification Opportunities for Simt Multi-asset and Conservative Income

0.6

Correlation Coefficient

Simt Multi-asset  Conservative Income

Poor diversification

The 3 months correlation between Simt and Conservative is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Asset Accumulation and Conservative Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conservative Income and Simt Multi-asset 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 Multi Asset Accumulation are associated (or correlated) with Conservative Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conservative Income has no effect on the direction of Simt Multi-asset i.e., Simt Multi-asset and Conservative Income go up and down completely randomly.

Pair Corralation between Simt Multi-asset and Conservative Income

Assuming the 90 days horizon Simt Multi Asset Accumulation is expected to under-perform the Conservative Income. In addition to that, Simt Multi-asset is 6.88 times more volatile than Conservative Income. It trades about -0.05 of its total potential returns per unit of risk. Conservative Income is currently generating about 0.21 per unit of volatility. If you would invest  996.00  in Conservative Income on February 7, 2024 and sell it today you would earn a total of  4.00  from holding Conservative Income or generate 0.4% return on investment over 90 days.

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

Simt Multi Asset Accumulation  vs.  Conservative Income

Simt Multi Asset

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Multi Asset Accumulation are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Multi-asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Conservative Income

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Conservative Income are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Conservative Income 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 Multi-asset and Conservative Income

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

The idea behind Simt Multi Asset Accumulation and Conservative Income 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.