Correlation Between IM Global and Simplify Exchange

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

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

Diversification Opportunities for IM Global and Simplify Exchange

-0.12

Correlation Coefficient

IM Global  Simplify Exchange

Good diversification

The 3 months correlation between DBEH and Simplify is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding IM Global Partner 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 IM Global 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 IM Global Partner 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 IM Global i.e., IM Global and Simplify Exchange go up and down completely randomly.

Pair Corralation between IM Global and Simplify Exchange

Given the investment horizon of 90 days IM Global is expected to generate 2.26 times less return on investment than Simplify Exchange. But when comparing it to its historical volatility, IM Global Partner is 1.57 times less risky than Simplify Exchange. It trades about 0.08 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,262  in Simplify Exchange Traded on October 7, 2024 and sell it today you would earn a total of  531.00  from holding Simplify Exchange Traded or generate 23.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	70.16%
Values	Daily Returns

IM Global Partner  vs.  Simplify Exchange Traded

IM Global Partner

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IM Global Partner has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, IM Global is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Simplify Exchange Traded

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Simplify Exchange may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with IM Global and Simplify Exchange

The main advantage of trading using opposite IM Global and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IM Global 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 IM Global Partner 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.