Correlation Between IPath Series and Simplify Equity
Can any of the company-specific risk be diversified away by investing in both IPath Series 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 IPath Series and Simplify Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iPath Series B and Simplify Equity PLUS, you can compare the effects of market volatilities on IPath Series 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 IPath Series with a short position of Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPath Series and Simplify Equity.
Diversification Opportunities for IPath Series and Simplify Equity
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between IPath and Simplify is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding iPath Series B 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 IPath Series 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 iPath Series B 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 IPath Series i.e., IPath Series and Simplify Equity go up and down completely randomly.
Pair Corralation between IPath Series and Simplify Equity
Considering the 90-day investment horizon iPath Series B is expected to under-perform the Simplify Equity. In addition to that, IPath Series is 4.32 times more volatile than Simplify Equity PLUS. It trades about -0.05 of its total potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.14 per unit of volatility. If you would invest 2,051 in Simplify Equity PLUS on November 19, 2024 and sell it today you would earn a total of 1,987 from holding Simplify Equity PLUS or generate 96.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iPath Series B vs. Simplify Equity PLUS
Performance |
| Timeline |
| iPath Series B |
| Simplify Equity PLUS |
IPath Series and Simplify Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IPath Series and Simplify Equity
The main advantage of trading using opposite IPath Series and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IPath Series 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.| IPath Series vs. ProShares Ultra VIX | IPath Series vs. ProShares Short VIX | IPath Series vs. ProShares UltraPro Short | IPath Series vs. iShares 20 Year |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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