Correlation Between IShares Core and Simplify Equity
Can any of the company-specific risk be diversified away by investing in both IShares Core and Simplify Equity 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 IShares Core and Simplify Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Simplify Equity PLUS, you can compare the effects of market volatilities on IShares Core and Simplify Equity 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 IShares Core with a short position of Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Simplify Equity.
Diversification Opportunities for IShares Core and Simplify Equity
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Simplify is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS and IShares Core 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 iShares Core SP are associated (or correlated) with Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of IShares Core i.e., IShares Core and Simplify Equity go up and down completely randomly.
Pair Corralation between IShares Core and Simplify Equity
Considering the 90-day investment horizon IShares Core is expected to generate 1.34 times less return on investment than Simplify Equity. But when comparing it to its historical volatility, iShares Core SP is 1.39 times less risky than Simplify Equity. It trades about 0.18 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,819 in Simplify Equity PLUS on August 29, 2024 and sell it today you would earn a total of 176.00 from holding Simplify Equity PLUS or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Simplify Equity PLUS
Performance |
| Timeline |
| iShares Core SP |
| Simplify Equity PLUS |
IShares Core and Simplify Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Simplify Equity
The main advantage of trading using opposite IShares Core and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Simplify Equity 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 Simplify Equity will offset losses from the drop in Simplify Equity's long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| Simplify Equity vs. JPMorgan BetaBuilders International | Simplify Equity vs. JPMorgan Core Plus | Simplify Equity vs. JPMorgan BetaBuilders Canada | Simplify Equity vs. JPMorgan Emerging Markets |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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