Correlation Between Simplify Exchange and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Simplify Exchange and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Simplify Exchange and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and Dow Jones.
Diversification Opportunities for Simplify Exchange and Dow Jones
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Simplify and Dow is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and Dow Jones go up and down completely randomly.
Pair Corralation between Simplify Exchange and Dow Jones
Given the investment horizon of 90 days Simplify Exchange Traded is expected to under-perform the Dow Jones. But the etf apears to be less risky and, when comparing its historical volatility, Simplify Exchange Traded is 3.33 times less risky than Dow Jones. The etf trades about -0.04 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,133,505 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 338,701 from holding Dow Jones Industrial or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Exchange Traded vs. Dow Jones Industrial
Performance |
| Timeline |
Simplify Exchange and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Simplify Exchange Traded
Pair trading matchups for Simplify Exchange
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Simplify Exchange and Dow Jones
The main advantage of trading using opposite Simplify Exchange and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Exchange position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Simplify Exchange vs. FlexShares Disciplined Duration | Simplify Exchange vs. Vanguard Mortgage Backed Securities | Simplify Exchange vs. WisdomTree Mortgage Plus | Simplify Exchange vs. iShares MBS ETF |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |