Correlation Between Volatility Shares and Simplify Exchange

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

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

Diversification Opportunities for Volatility Shares and Simplify Exchange

-0.72

Correlation Coefficient

Volatility Shares  Simplify Exchange

Pay attention - limited upside

The 3 months correlation between Volatility and Simplify is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust 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 Volatility Shares 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 Volatility Shares Trust 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 Volatility Shares i.e., Volatility Shares and Simplify Exchange go up and down completely randomly.

Pair Corralation between Volatility Shares and Simplify Exchange

Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 13.15 times more return on investment than Simplify Exchange. However, Volatility Shares is 13.15 times more volatile than Simplify Exchange Traded. It trades about 0.27 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  2,344  in Volatility Shares Trust on September 16, 2024 and sell it today you would earn a total of  4,118  from holding Volatility Shares Trust or generate 175.68% return on investment over 90 days.

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

Volatility Shares Trust  vs.  Simplify Exchange Traded

Volatility Shares Trust

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Volatility Shares Trust are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Volatility Shares showed solid returns over the last few months and may actually be approaching a breakup point.

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 Volatility Shares and Simplify Exchange

The main advantage of trading using opposite Volatility Shares and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares 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 Volatility Shares Trust 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.