Correlation Between ETF Series and Simplify Equity
Can any of the company-specific risk be diversified away by investing in both ETF Series 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 ETF Series and Simplify Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETF Series Solutions and Simplify Equity PLUS, you can compare the effects of market volatilities on ETF Series 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 ETF Series with a short position of Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Series and Simplify Equity.
Diversification Opportunities for ETF Series and Simplify Equity
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETF and Simplify is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ETF Series Solutions 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 ETF Series 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 ETF Series Solutions 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 ETF Series i.e., ETF Series and Simplify Equity go up and down completely randomly.
Pair Corralation between ETF Series and Simplify Equity
Given the investment horizon of 90 days ETF Series Solutions is expected to generate 1.01 times more return on investment than Simplify Equity. However, ETF Series is 1.01 times more volatile than Simplify Equity PLUS. It trades about 0.1 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.1 per unit of risk. If you would invest 2,846 in ETF Series Solutions on November 9, 2024 and sell it today you would earn a total of 636.00 from holding ETF Series Solutions or generate 22.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETF Series Solutions vs. Simplify Equity PLUS
Performance |
| Timeline |
| ETF Series Solutions |
| Simplify Equity PLUS |
ETF Series and Simplify Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETF Series and Simplify Equity
The main advantage of trading using opposite ETF Series and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETF Series 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.| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series vs. First Trust Exchange Traded |
| Simplify Equity vs. PIMCO ETF Trust | Simplify Equity vs. Virtus Newfleet Multi Sector | Simplify Equity vs. Aquagold International | Simplify Equity vs. Morningstar Unconstrained Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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