Correlation Between Simplify Macro and IQ Hedge

Can any of the company-specific risk be diversified away by investing in both Simplify Macro and IQ Hedge 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 IQ Hedge 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 IQ Hedge Multi Strategy, you can compare the effects of market volatilities on Simplify Macro and IQ Hedge 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 IQ Hedge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Macro and IQ Hedge.

Diversification Opportunities for Simplify Macro and IQ Hedge

0.73

Correlation Coefficient

Simplify Macro  IQ Hedge

Poor diversification

The 3 months correlation between Simplify and QAI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Macro Strategy and IQ Hedge Multi Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Hedge Multi 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 IQ Hedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Hedge Multi has no effect on the direction of Simplify Macro i.e., Simplify Macro and IQ Hedge go up and down completely randomly.

Pair Corralation between Simplify Macro and IQ Hedge

Considering the 90-day investment horizon Simplify Macro Strategy is expected to generate 2.03 times more return on investment than IQ Hedge. However, Simplify Macro is 2.03 times more volatile than IQ Hedge Multi Strategy. It trades about 0.05 of its potential returns per unit of risk. IQ Hedge Multi Strategy is currently generating about 0.02 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	Significant
Accuracy	100.0%
Values	Daily Returns

Simplify Macro Strategy  vs.  IQ Hedge Multi Strategy

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.

IQ Hedge Multi

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Hedge Multi Strategy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IQ Hedge is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Simplify Macro and IQ Hedge

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

The idea behind Simplify Macro Strategy and IQ Hedge Multi Strategy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.