Correlation Between Simplify Exchange and US Treasury
Can any of the company-specific risk be diversified away by investing in both Simplify Exchange and US Treasury 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 Exchange and US Treasury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simplify Exchange Traded and US Treasury 20, you can compare the effects of market volatilities on Simplify Exchange and US Treasury 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 Exchange with a short position of US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and US Treasury.
Diversification Opportunities for Simplify Exchange and US Treasury
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Simplify and UTWY is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and US Treasury 20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 20 and Simplify Exchange 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 Exchange Traded are associated (or correlated) with US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 20 has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and US Treasury go up and down completely randomly.
Pair Corralation between Simplify Exchange and US Treasury
Considering the 90-day investment horizon Simplify Exchange is expected to generate 8.79 times less return on investment than US Treasury. In addition to that, Simplify Exchange is 1.42 times more volatile than US Treasury 20. It trades about 0.01 of its total potential returns per unit of risk. US Treasury 20 is currently generating about 0.07 per unit of volatility. If you would invest 4,487 in US Treasury 20 on August 30, 2024 and sell it today you would earn a total of 56.00 from holding US Treasury 20 or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Exchange Traded vs. US Treasury 20
Performance |
| Timeline |
| Simplify Exchange Traded |
| US Treasury 20 |
Simplify Exchange and US Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Exchange and US Treasury
The main advantage of trading using opposite Simplify Exchange and US Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Exchange position performs unexpectedly, US Treasury 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 US Treasury will offset losses from the drop in US Treasury's long position.| Simplify Exchange vs. SPDR Barclays Short | Simplify Exchange vs. SPDR Portfolio Intermediate | Simplify Exchange vs. SPDR Barclays Long | Simplify Exchange vs. SPDR Barclays Intermediate |
| US Treasury vs. US Treasury 30 | US Treasury vs. US Treasury 5 | US Treasury vs. US Treasury 7 | US Treasury vs. US Treasury 3 |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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