Correlation Between Simplify Equity and Natixis ETF
Can any of the company-specific risk be diversified away by investing in both Simplify Equity and Natixis ETF 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 Natixis ETF 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 Natixis ETF Trust, you can compare the effects of market volatilities on Simplify Equity and Natixis ETF 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 Natixis ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and Natixis ETF.
Diversification Opportunities for Simplify Equity and Natixis ETF
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simplify and Natixis is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Natixis ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis ETF Trust 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 Natixis ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis ETF Trust has no effect on the direction of Simplify Equity i.e., Simplify Equity and Natixis ETF go up and down completely randomly.
Pair Corralation between Simplify Equity and Natixis ETF
Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 1.4 times more return on investment than Natixis ETF. However, Simplify Equity is 1.4 times more volatile than Natixis ETF Trust. It trades about -0.11 of its potential returns per unit of risk. Natixis ETF Trust is currently generating about -0.23 per unit of risk. If you would invest 4,272 in Simplify Equity PLUS on November 28, 2024 and sell it today you would lose (102.00) from holding Simplify Equity PLUS or give up 2.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Equity PLUS vs. Natixis ETF Trust
Performance |
| Timeline |
| Simplify Equity PLUS |
| Natixis ETF Trust |
Simplify Equity and Natixis ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Equity and Natixis ETF
The main advantage of trading using opposite Simplify Equity and Natixis ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity position performs unexpectedly, Natixis ETF 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 Natixis ETF will offset losses from the drop in Natixis ETF's long position.The idea behind Simplify Equity PLUS and Natixis ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Natixis ETF vs. Simplify Equity PLUS | Natixis ETF vs. Virtus WMC International | Natixis ETF vs. Affinity World Leaders |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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