Correlation Between Simplify Equity and KraneShares Electric
Can any of the company-specific risk be diversified away by investing in both Simplify Equity and KraneShares Electric 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 KraneShares Electric 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 KraneShares Electric Vehicles, you can compare the effects of market volatilities on Simplify Equity and KraneShares Electric 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 KraneShares Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and KraneShares Electric.
Diversification Opportunities for Simplify Equity and KraneShares Electric
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Simplify and KraneShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and KraneShares Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares Electric 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 KraneShares Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares Electric has no effect on the direction of Simplify Equity i.e., Simplify Equity and KraneShares Electric go up and down completely randomly.
Pair Corralation between Simplify Equity and KraneShares Electric
Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 0.9 times more return on investment than KraneShares Electric. However, Simplify Equity PLUS is 1.11 times less risky than KraneShares Electric. It trades about 0.21 of its potential returns per unit of risk. KraneShares Electric Vehicles is currently generating about 0.12 per unit of risk. If you would invest 3,719 in Simplify Equity PLUS on November 3, 2024 and sell it today you would earn a total of 191.00 from holding Simplify Equity PLUS or generate 5.14% 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. KraneShares Electric Vehicles
Performance |
| Timeline |
| Simplify Equity PLUS |
| KraneShares Electric |
Simplify Equity and KraneShares Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Equity and KraneShares Electric
The main advantage of trading using opposite Simplify Equity and KraneShares Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Equity position performs unexpectedly, KraneShares Electric 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 KraneShares Electric will offset losses from the drop in KraneShares Electric's long position.The idea behind Simplify Equity PLUS and KraneShares Electric Vehicles 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.| KraneShares Electric vs. SPDR SP Kensho | KraneShares Electric vs. iShares Self Driving EV | KraneShares Electric vs. Amplify Lithium Battery | KraneShares Electric vs. Global X Autonomous |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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