Correlation Between Simplify Equity and Simplify Exchange
Can any of the company-specific risk be diversified away by investing in both Simplify Equity and Simplify Exchange 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 Simplify Exchange 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 Simplify Exchange Traded, you can compare the effects of market volatilities on Simplify Equity and Simplify Exchange 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 Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and Simplify Exchange.
Diversification Opportunities for Simplify Equity and Simplify Exchange
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simplify and Simplify is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded 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 Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of Simplify Equity i.e., Simplify Equity and Simplify Exchange go up and down completely randomly.
Pair Corralation between Simplify Equity and Simplify Exchange
Considering the 90-day investment horizon Simplify Equity PLUS is expected to generate 0.93 times more return on investment than Simplify Exchange. However, Simplify Equity PLUS is 1.07 times less risky than Simplify Exchange. It trades about 0.32 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.22 per unit of risk. If you would invest 3,310 in Simplify Equity PLUS on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Simplify Equity PLUS or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Equity PLUS vs. Simplify Exchange Traded
Performance |
| Timeline |
| Simplify Equity PLUS |
| Simplify Exchange Traded |
Simplify Equity and Simplify Exchange Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Equity and Simplify Exchange
The main advantage of trading using opposite Simplify Equity and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity position performs unexpectedly, Simplify Exchange 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 Exchange will offset losses from the drop in Simplify Exchange's long position.| Simplify Equity vs. Vanguard Total Stock | Simplify Equity vs. SPDR SP 500 | Simplify Equity vs. iShares Core SP | Simplify Equity vs. Vanguard Dividend Appreciation |
| Simplify Exchange vs. KFA Mount Lucas | Simplify Exchange vs. iMGP DBi Managed | Simplify Exchange vs. Simplify Interest Rate | Simplify Exchange vs. AGFiQ Market Neutral |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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