Correlation Between IShares Ethereum and Simplify Equity

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

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

Diversification Opportunities for IShares Ethereum and Simplify Equity

0.96

Correlation Coefficient

IShares Ethereum  Simplify Equity

Almost no diversification

The 3 months correlation between IShares and Simplify is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ethereum Trust 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 IShares Ethereum 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 iShares Ethereum Trust 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 IShares Ethereum i.e., IShares Ethereum and Simplify Equity go up and down completely randomly.

Pair Corralation between IShares Ethereum and Simplify Equity

Given the investment horizon of 90 days iShares Ethereum Trust is expected to generate 4.07 times more return on investment than Simplify Equity. However, IShares Ethereum is 4.07 times more volatile than Simplify Equity PLUS. It trades about 0.02 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.03 per unit of risk. If you would invest  2,515  in iShares Ethereum Trust on September 27, 2024 and sell it today you would earn a total of  5.00  from holding iShares Ethereum Trust or generate 0.2% return on investment over 90 days.

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

iShares Ethereum Trust  vs.  Simplify Equity PLUS

iShares Ethereum Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ethereum Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady technical indicators, IShares Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

Simplify Equity PLUS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Simplify Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Ethereum and Simplify Equity

The main advantage of trading using opposite IShares Ethereum and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Ethereum 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 iShares Ethereum Trust 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.