Correlation Between Simplify Macro and MBIA

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

By analyzing existing cross correlation between Simplify Macro Strategy and MBIA Inc, you can compare the effects of market volatilities on Simplify Macro and MBIA 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 Macro with a short position of MBIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Macro and MBIA.

Diversification Opportunities for Simplify Macro and MBIA

0.28

Correlation Coefficient

Simplify Macro  MBIA

Modest diversification

The 3 months correlation between Simplify and MBIA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Macro Strategy and MBIA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBIA Inc and Simplify Macro 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 Macro Strategy are associated (or correlated) with MBIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBIA Inc has no effect on the direction of Simplify Macro i.e., Simplify Macro and MBIA go up and down completely randomly.

Pair Corralation between Simplify Macro and MBIA

Considering the 90-day investment horizon Simplify Macro Strategy is expected to generate 0.18 times more return on investment than MBIA. However, Simplify Macro Strategy is 5.45 times less risky than MBIA. It trades about 0.05 of its potential returns per unit of risk. MBIA Inc is currently generating about -0.05 per unit of risk. If you would invest  2,099  in Simplify Macro Strategy on December 27, 2024 and sell it today you would earn a total of  45.00  from holding Simplify Macro Strategy or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Simplify Macro Strategy  vs.  MBIA Inc

Simplify Macro Strategy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Macro Strategy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, Simplify Macro is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

MBIA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days MBIA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Simplify Macro and MBIA

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

The idea behind Simplify Macro Strategy and MBIA Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.