Correlation Between Simplify Exchange and Global X
Can any of the company-specific risk be diversified away by investing in both Simplify Exchange and Global X 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 Simplify Exchange and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplify Exchange Traded and Global X SP, you can compare the effects of market volatilities on Simplify Exchange and Global X 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 Simplify Exchange with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and Global X.
Diversification Opportunities for Simplify Exchange and Global X
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simplify and Global is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and Simplify Exchange 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 Simplify Exchange Traded are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SP has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and Global X go up and down completely randomly.
Pair Corralation between Simplify Exchange and Global X
Given the investment horizon of 90 days Simplify Exchange is expected to generate 1.03 times less return on investment than Global X. But when comparing it to its historical volatility, Simplify Exchange Traded is 1.29 times less risky than Global X. It trades about 0.13 of its potential returns per unit of risk. Global X SP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,036 in Global X SP on November 27, 2024 and sell it today you would earn a total of 761.00 from holding Global X SP or generate 37.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Exchange Traded vs. Global X SP
Performance |
| Timeline |
| Simplify Exchange Traded |
| Global X SP |
Simplify Exchange and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Exchange and Global X
The main advantage of trading using opposite Simplify Exchange and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Exchange position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Simplify Exchange vs. Simplify Equity PLUS | Simplify Exchange vs. Simplify Volatility Premium | Simplify Exchange vs. Simplify Exchange Traded | Simplify Exchange vs. Simplify Equity PLUS |
| Global X vs. Global X SP | Global X vs. Global X NASDAQ | Global X vs. Global X NASDAQ | Global X vs. Global X SP |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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