Correlation Between Simplify Equity and JPMorgan BetaBuilders
Can any of the company-specific risk be diversified away by investing in both Simplify Equity and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders 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 JPMorgan BetaBuilders International, you can compare the effects of market volatilities on Simplify Equity and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and JPMorgan BetaBuilders.
Diversification Opportunities for Simplify Equity and JPMorgan BetaBuilders
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Simplify and JPMorgan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and JPMorgan BetaBuilders Internat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of Simplify Equity i.e., Simplify Equity and JPMorgan BetaBuilders go up and down completely randomly.
Pair Corralation between Simplify Equity and JPMorgan BetaBuilders
Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 1.14 times more return on investment than JPMorgan BetaBuilders. However, Simplify Equity is 1.14 times more volatile than JPMorgan BetaBuilders International. It trades about 0.09 of its potential returns per unit of risk. JPMorgan BetaBuilders International is currently generating about 0.06 per unit of risk. If you would invest 2,551 in Simplify Equity PLUS on November 27, 2024 and sell it today you would earn a total of 1,266 from holding Simplify Equity PLUS or generate 49.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Equity PLUS vs. JPMorgan BetaBuilders Internat
Performance |
| Timeline |
| Simplify Equity PLUS |
| JPMorgan BetaBuilders |
Simplify Equity and JPMorgan BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Equity and JPMorgan BetaBuilders
The main advantage of trading using opposite Simplify Equity and JPMorgan BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity position performs unexpectedly, JPMorgan BetaBuilders 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 JPMorgan BetaBuilders will offset losses from the drop in JPMorgan BetaBuilders' long position.The idea behind Simplify Equity PLUS and JPMorgan BetaBuilders International 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.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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