Correlation Between Small Cap and Simt Tax-managed

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

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

Diversification Opportunities for Small Cap and Simt Tax-managed

0.54

Correlation Coefficient

Small Cap  Simt Tax-managed

Very weak diversification

The 3 months correlation between Small and Simt is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Growth 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 Small Cap 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 Small Cap Growth are associated (or correlated) with Simt Tax-managed. 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 Small Cap i.e., Small Cap and Simt Tax-managed go up and down completely randomly.

Pair Corralation between Small Cap and Simt Tax-managed

Assuming the 90 days horizon Small Cap is expected to generate 10.09 times less return on investment than Simt Tax-managed. In addition to that, Small Cap is 2.01 times more volatile than Simt Tax Managed Large. It trades about 0.0 of its total potential returns per unit of risk. Simt Tax Managed Large is currently generating about 0.06 per unit of volatility. If you would invest  3,886  in Simt Tax Managed Large on August 20, 2025 and sell it today you would earn a total of  83.00  from holding Simt Tax Managed Large or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Small Cap Growth  vs.  Simt Tax Managed Large

Small Cap Growth

Risk-Adjusted Performance

Weakest

Over the last 90 days Small Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Small Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simt Tax Managed

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Large are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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.

Pair Trading with Small Cap and Simt Tax-managed

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

The idea behind Small Cap Growth 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..