Correlation Between Simplify Volatility and Global X
Can any of the company-specific risk be diversified away by investing in both Simplify Volatility and Global X 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 Volatility and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplify Volatility Premium and Global X SP, you can compare the effects of market volatilities on Simplify Volatility and Global X 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 Volatility with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Volatility and Global X.
Diversification Opportunities for Simplify Volatility and Global X
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Simplify and Global is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Volatility Premium and Global X SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SP and Simplify Volatility 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 Volatility Premium are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SP has no effect on the direction of Simplify Volatility i.e., Simplify Volatility and Global X go up and down completely randomly.
Pair Corralation between Simplify Volatility and Global X
Given the investment horizon of 90 days Simplify Volatility is expected to generate 1.26 times less return on investment than Global X. In addition to that, Simplify Volatility is 1.15 times more volatile than Global X SP. It trades about 0.1 of its total potential returns per unit of risk. Global X SP is currently generating about 0.14 per unit of volatility. If you would invest 2,449 in Global X SP on August 29, 2024 and sell it today you would earn a total of 891.00 from holding Global X SP or generate 36.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Volatility Premium vs. Global X SP
Performance |
| Timeline |
| Simplify Volatility |
| Global X SP |
Simplify Volatility and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Volatility and Global X
The main advantage of trading using opposite Simplify Volatility and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Volatility position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Simplify Volatility vs. Morningstar Unconstrained Allocation | Simplify Volatility vs. High Yield Municipal Fund | Simplify Volatility vs. Via Renewables | Simplify Volatility vs. Knife River |
| Global X vs. WisdomTree 9060 Balanced | Global X vs. RPAR Risk Parity | Global X vs. Cambria Tail Risk | Global X vs. Aptus Defined Risk |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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