Correlation Between Simplify Equity and SPDR Galaxy
Can any of the company-specific risk be diversified away by investing in both Simplify Equity and SPDR Galaxy 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 Equity and SPDR Galaxy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplify Equity PLUS and SPDR Galaxy Digital, you can compare the effects of market volatilities on Simplify Equity and SPDR Galaxy 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 Equity with a short position of SPDR Galaxy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and SPDR Galaxy.
Diversification Opportunities for Simplify Equity and SPDR Galaxy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simplify and SPDR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and SPDR Galaxy Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Galaxy Digital and Simplify Equity 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 Equity PLUS are associated (or correlated) with SPDR Galaxy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Galaxy Digital has no effect on the direction of Simplify Equity i.e., Simplify Equity and SPDR Galaxy go up and down completely randomly.
Pair Corralation between Simplify Equity and SPDR Galaxy
Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 0.17 times more return on investment than SPDR Galaxy. However, Simplify Equity PLUS is 5.76 times less risky than SPDR Galaxy. It trades about 0.11 of its potential returns per unit of risk. SPDR Galaxy Digital is currently generating about -0.03 per unit of risk. If you would invest 3,943 in Simplify Equity PLUS on September 13, 2024 and sell it today you would earn a total of 54.00 from holding Simplify Equity PLUS or generate 1.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Simplify Equity PLUS vs. SPDR Galaxy Digital
Performance |
| Timeline |
| Simplify Equity PLUS |
| SPDR Galaxy Digital |
Simplify Equity and SPDR Galaxy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Equity and SPDR Galaxy
The main advantage of trading using opposite Simplify Equity and SPDR Galaxy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity position performs unexpectedly, SPDR Galaxy 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 SPDR Galaxy will offset losses from the drop in SPDR Galaxy's long position.| Simplify Equity vs. Grayscale Bitcoin Trust | Simplify Equity vs. Siren Nasdaq NexGen | Simplify Equity vs. First Trust Indxx | Simplify Equity vs. Bitwise Crypto Industry |
| SPDR Galaxy vs. Grayscale Bitcoin Trust | SPDR Galaxy vs. Siren Nasdaq NexGen | SPDR Galaxy vs. First Trust Indxx | SPDR Galaxy vs. Bitwise Crypto Industry |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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