Correlation Between IMGP DBi and Simplify Interest

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

By analyzing existing cross correlation between iMGP DBi Managed and Simplify Interest Rate, you can compare the effects of market volatilities on IMGP DBi and Simplify Interest 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 IMGP DBi with a short position of Simplify Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMGP DBi and Simplify Interest.

Diversification Opportunities for IMGP DBi and Simplify Interest

-0.89

Correlation Coefficient

IMGP DBi  Simplify Interest

Pay attention - limited upside

The 3 months correlation between IMGP and Simplify is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding iMGP DBi Managed and Simplify Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Interest Rate and IMGP DBi 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 iMGP DBi Managed are associated (or correlated) with Simplify Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Interest Rate has no effect on the direction of IMGP DBi i.e., IMGP DBi and Simplify Interest go up and down completely randomly.

Pair Corralation between IMGP DBi and Simplify Interest

Given the investment horizon of 90 days iMGP DBi Managed is expected to under-perform the Simplify Interest. But the etf apears to be less risky and, when comparing its historical volatility, iMGP DBi Managed is 4.92 times less risky than Simplify Interest. The etf trades about -0.04 of its potential returns per unit of risk. The Simplify Interest Rate is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  4,691  in Simplify Interest Rate on September 26, 2024 and sell it today you would earn a total of  552.00  from holding Simplify Interest Rate or generate 11.77% return on investment over 90 days.

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

iMGP DBi Managed  vs.  Simplify Interest Rate

iMGP DBi Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iMGP DBi Managed has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, IMGP DBi is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Simplify Interest Rate

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Interest Rate are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, Simplify Interest showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IMGP DBi and Simplify Interest

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

The idea behind iMGP DBi Managed and Simplify Interest Rate 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.