Correlation Between SPDR SP and Simplify Equity
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Simplify Equity 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 SPDR SP and Simplify Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP 500 and Simplify Equity PLUS, you can compare the effects of market volatilities on SPDR SP and Simplify Equity 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 SPDR SP with a short position of Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Simplify Equity.
Diversification Opportunities for SPDR SP and Simplify Equity
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Simplify is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP 500 and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS and SPDR SP 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 SPDR SP 500 are associated (or correlated) with Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of SPDR SP i.e., SPDR SP and Simplify Equity go up and down completely randomly.
Pair Corralation between SPDR SP and Simplify Equity
Considering the 90-day investment horizon SPDR SP is expected to generate 1.2 times less return on investment than Simplify Equity. But when comparing it to its historical volatility, SPDR SP 500 is 1.39 times less risky than Simplify Equity. It trades about 0.11 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,719 in Simplify Equity PLUS on September 3, 2024 and sell it today you would earn a total of 1,797 from holding Simplify Equity PLUS or generate 66.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP 500 vs. Simplify Equity PLUS
Performance |
| Timeline |
| SPDR SP 500 |
| Simplify Equity PLUS |
SPDR SP and Simplify Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Simplify Equity
The main advantage of trading using opposite SPDR SP and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Simplify Equity 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 Equity will offset losses from the drop in Simplify Equity's long position.| SPDR SP vs. SPDR Gold Shares | SPDR SP vs. Vanguard Real Estate | SPDR SP vs. Vanguard Total Stock | SPDR SP vs. Vanguard FTSE Emerging |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |