Correlation Between Discipline Fund and Simplify Asset

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

By analyzing existing cross correlation between Discipline Fund ETF and Simplify Asset Management, you can compare the effects of market volatilities on Discipline Fund and Simplify Asset 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 Discipline Fund with a short position of Simplify Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discipline Fund and Simplify Asset.

Diversification Opportunities for Discipline Fund and Simplify Asset

0.0

Correlation Coefficient

Discipline Fund  Simplify Asset

Pay attention - limited upside

The 3 months correlation between Discipline and Simplify is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Discipline Fund ETF and Simplify Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Asset Management and Discipline Fund 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 Discipline Fund ETF are associated (or correlated) with Simplify Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Asset Management has no effect on the direction of Discipline Fund i.e., Discipline Fund and Simplify Asset go up and down completely randomly.

Pair Corralation between Discipline Fund and Simplify Asset

If you would invest  2,229  in Discipline Fund ETF on December 22, 2024 and sell it today you would earn a total of  75.00  from holding Discipline Fund ETF or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Discipline Fund ETF  vs.  Simplify Asset Management

Discipline Fund ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Discipline Fund ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Discipline Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Simplify Asset Management

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Discipline Fund and Simplify Asset

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

The idea behind Discipline Fund ETF and Simplify Asset Management 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.