Correlation Between Siren Nasdaq and Simplify Equity

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

By analyzing existing cross correlation between Siren Nasdaq NexGen and Simplify Equity PLUS, you can compare the effects of market volatilities on Siren Nasdaq 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 Siren Nasdaq with a short position of Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siren Nasdaq and Simplify Equity.

Diversification Opportunities for Siren Nasdaq and Simplify Equity

0.88

Correlation Coefficient

Siren Nasdaq  Simplify Equity

Very poor diversification

The 3 months correlation between Siren and Simplify is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Siren Nasdaq NexGen 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 Siren Nasdaq 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 Siren Nasdaq NexGen 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 Siren Nasdaq i.e., Siren Nasdaq and Simplify Equity go up and down completely randomly.

Pair Corralation between Siren Nasdaq and Simplify Equity

Given the investment horizon of 90 days Siren Nasdaq NexGen is expected to under-perform the Simplify Equity. In addition to that, Siren Nasdaq is 1.98 times more volatile than Simplify Equity PLUS. It trades about -0.18 of its total potential returns per unit of risk. Simplify Equity PLUS is currently generating about -0.08 per unit of volatility. If you would invest  3,879  in Simplify Equity PLUS on December 30, 2024 and sell it today you would lose (256.00) from holding Simplify Equity PLUS or give up 6.6% of portfolio value over 90 days.

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

Siren Nasdaq NexGen  vs.  Simplify Equity PLUS

Siren Nasdaq NexGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siren Nasdaq NexGen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Simplify Equity PLUS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Equity PLUS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Siren Nasdaq and Simplify Equity

The main advantage of trading using opposite Siren Nasdaq and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siren Nasdaq 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.

The idea behind Siren Nasdaq NexGen and Simplify Equity PLUS 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.