Correlation Between IShares Core and Simplify Exchange

Can any of the company-specific risk be diversified away by investing in both IShares Core and Simplify Exchange 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 IShares Core and Simplify Exchange into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core Aggregate and Simplify Exchange Traded, you can compare the effects of market volatilities on IShares Core and Simplify Exchange 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 IShares Core with a short position of Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Simplify Exchange.

Diversification Opportunities for IShares Core and Simplify Exchange

0.93

Correlation Coefficient

IShares Core  Simplify Exchange

Almost no diversification

The 3 months correlation between IShares and Simplify is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Aggregate and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded and IShares Core 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 iShares Core Aggregate are associated (or correlated) with Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of IShares Core i.e., IShares Core and Simplify Exchange go up and down completely randomly.

Pair Corralation between IShares Core and Simplify Exchange

Considering the 90-day investment horizon iShares Core Aggregate is expected to generate 0.61 times more return on investment than Simplify Exchange. However, iShares Core Aggregate is 1.64 times less risky than Simplify Exchange. It trades about -0.15 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about -0.23 per unit of risk. If you would invest  10,103  in iShares Core Aggregate on September 16, 2024 and sell it today you would lose (311.00) from holding iShares Core Aggregate or give up 3.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares Core Aggregate  vs.  Simplify Exchange Traded

iShares Core Aggregate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core Aggregate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Core is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Simplify Exchange Traded

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simplify Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with IShares Core and Simplify Exchange

The main advantage of trading using opposite IShares Core and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Simplify Exchange 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 Exchange will offset losses from the drop in Simplify Exchange's long position.

The idea behind iShares Core Aggregate and Simplify Exchange Traded 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.