Correlation Between Simplify Equity and Franklin Bitcoin
Can any of the company-specific risk be diversified away by investing in both Simplify Equity and Franklin Bitcoin 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 Franklin Bitcoin 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 Franklin Bitcoin ETF, you can compare the effects of market volatilities on Simplify Equity and Franklin Bitcoin 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 Franklin Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and Franklin Bitcoin.
Diversification Opportunities for Simplify Equity and Franklin Bitcoin
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Simplify and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Franklin Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Bitcoin ETF 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 Franklin Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Bitcoin ETF has no effect on the direction of Simplify Equity i.e., Simplify Equity and Franklin Bitcoin go up and down completely randomly.
Pair Corralation between Simplify Equity and Franklin Bitcoin
Given the investment horizon of 90 days Simplify Equity is expected to generate 3.76 times less return on investment than Franklin Bitcoin. But when comparing it to its historical volatility, Simplify Equity PLUS is 4.34 times less risky than Franklin Bitcoin. It trades about 0.45 of its potential returns per unit of risk. Franklin Bitcoin ETF is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 4,052 in Franklin Bitcoin ETF on September 1, 2024 and sell it today you would earn a total of 1,580 from holding Franklin Bitcoin ETF or generate 38.99% 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. Franklin Bitcoin ETF
Performance |
| Timeline |
| Simplify Equity PLUS |
| Franklin Bitcoin ETF |
Simplify Equity and Franklin Bitcoin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Equity and Franklin Bitcoin
The main advantage of trading using opposite Simplify Equity and Franklin Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity position performs unexpectedly, Franklin Bitcoin 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 Franklin Bitcoin will offset losses from the drop in Franklin Bitcoin's long position.| Simplify Equity vs. First Trust SkyBridge | Simplify Equity vs. VanEck Digital Transformation | Simplify Equity vs. Global X Blockchain | Simplify Equity vs. Bitcoin Strategy Profund |
| Franklin Bitcoin vs. ProShares Trust | Franklin Bitcoin vs. iShares Ethereum Trust | Franklin Bitcoin vs. ProShares Trust | Franklin Bitcoin vs. Grayscale Ethereum Trust |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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