Correlation Between Simplify Exchange and EA Series

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

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

Diversification Opportunities for Simplify Exchange and EA Series

0.06

Correlation Coefficient

Simplify Exchange  EA Series

Significant diversification

The 3 months correlation between Simplify and CCMG is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust and Simplify Exchange 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 Simplify Exchange Traded are associated (or correlated) with EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and EA Series go up and down completely randomly.

Pair Corralation between Simplify Exchange and EA Series

Considering the 90-day investment horizon Simplify Exchange Traded is expected to generate 1.35 times more return on investment than EA Series. However, Simplify Exchange is 1.35 times more volatile than EA Series Trust. It trades about 0.18 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.24 per unit of risk. If you would invest  2,672  in Simplify Exchange Traded on September 4, 2024 and sell it today you would earn a total of  82.00  from holding Simplify Exchange Traded or generate 3.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Simplify Exchange Traded  vs.  EA Series Trust

Simplify Exchange Traded

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Simplify Exchange is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

EA Series Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, EA Series is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Simplify Exchange and EA Series

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

The idea behind Simplify Exchange Traded and EA Series Trust 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.