Correlation Between ProShares Trust and Simplify Macro

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

By analyzing existing cross correlation between ProShares Trust and Simplify Macro Strategy, you can compare the effects of market volatilities on ProShares Trust and Simplify Macro 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 ProShares Trust with a short position of Simplify Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ProShares Trust and Simplify Macro.

Diversification Opportunities for ProShares Trust and Simplify Macro

-0.71

Correlation Coefficient

ProShares Trust  Simplify Macro

Pay attention - limited upside

The 3 months correlation between ProShares and Simplify is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding ProShares Trust and Simplify Macro Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Macro Strategy and ProShares Trust 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 ProShares Trust are associated (or correlated) with Simplify Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Macro Strategy has no effect on the direction of ProShares Trust i.e., ProShares Trust and Simplify Macro go up and down completely randomly.

Pair Corralation between ProShares Trust and Simplify Macro

Given the investment horizon of 90 days ProShares Trust is expected to under-perform the Simplify Macro. In addition to that, ProShares Trust is 4.52 times more volatile than Simplify Macro Strategy. It trades about -0.1 of its total potential returns per unit of risk. Simplify Macro Strategy is currently generating about 0.0 per unit of volatility. If you would invest  2,231  in Simplify Macro Strategy on September 12, 2024 and sell it today you would lose (1.00) from holding Simplify Macro Strategy or give up 0.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

ProShares Trust   vs.  Simplify Macro Strategy

ProShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Simplify Macro Strategy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Macro Strategy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Simplify Macro is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ProShares Trust and Simplify Macro

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

The idea behind ProShares Trust and Simplify Macro Strategy 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.