Correlation Between Simt Multi and Driehaus Emerging

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

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

Diversification Opportunities for Simt Multi and Driehaus Emerging

0.74

Correlation Coefficient

Simt Multi  Driehaus Emerging

Poor diversification

The 3 months correlation between Simt and Driehaus is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Simt Multi Asset Inflation and Driehaus Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driehaus Emerging Markets and Simt Multi 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 Inflation are associated (or correlated) with Driehaus Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driehaus Emerging Markets has no effect on the direction of Simt Multi i.e., Simt Multi and Driehaus Emerging go up and down completely randomly.

Pair Corralation between Simt Multi and Driehaus Emerging

Assuming the 90 days horizon Simt Multi is expected to generate 1.21 times less return on investment than Driehaus Emerging. But when comparing it to its historical volatility, Simt Multi Asset Inflation is 4.09 times less risky than Driehaus Emerging. It trades about 0.22 of its potential returns per unit of risk. Driehaus Emerging Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,049  in Driehaus Emerging Markets on January 30, 2024 and sell it today you would earn a total of  21.00  from holding Driehaus Emerging Markets or generate 1.02% 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 Inflation  vs.  Driehaus Emerging Markets

Simt Multi Asset

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Multi Asset Inflation are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Driehaus Emerging Markets

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Driehaus Emerging Markets are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Driehaus Emerging may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Simt Multi and Driehaus Emerging

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

The idea behind Simt Multi Asset Inflation and Driehaus Emerging Markets 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.