Correlation Between Simt Tax-managed and Small Cap

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

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

Diversification Opportunities for Simt Tax-managed and Small Cap

-0.31

Correlation Coefficient

Simt Tax-managed  Small Cap

Very good diversification

The 3 months correlation between Simt and Small is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Simt Tax Managed Large and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value and Simt Tax-managed 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 Tax Managed Large are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Simt Tax-managed i.e., Simt Tax-managed and Small Cap go up and down completely randomly.

Pair Corralation between Simt Tax-managed and Small Cap

Assuming the 90 days horizon Simt Tax Managed Large is expected to generate 0.55 times more return on investment than Small Cap. However, Simt Tax Managed Large is 1.83 times less risky than Small Cap. It trades about 0.07 of its potential returns per unit of risk. Small Cap Value is currently generating about -0.11 per unit of risk. If you would invest  3,911  in Simt Tax Managed Large on August 26, 2025 and sell it today you would earn a total of  101.00  from holding Simt Tax Managed Large or generate 2.58% return on investment over 90 days.

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

Simt Tax Managed Large  vs.  Small Cap Value

Simt Tax Managed

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Large are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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.

Small Cap Value

Risk-Adjusted Performance

Weakest

Over the last 90 days Small Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Simt Tax-managed and Small Cap

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

The idea behind Simt Tax Managed Large and Small Cap Value 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.