Correlation Between Simplify Macro and VanEck Inflation

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

Diversification Opportunities for Simplify Macro and VanEck Inflation

0.8

Correlation Coefficient

Simplify Macro  VanEck Inflation

Very poor diversification

The 3 months correlation between Simplify and VanEck is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Macro Strategy and VanEck Inflation Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Inflation All 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 VanEck Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Inflation All has no effect on the direction of Simplify Macro i.e., Simplify Macro and VanEck Inflation go up and down completely randomly.

Pair Corralation between Simplify Macro and VanEck Inflation

Considering the 90-day investment horizon Simplify Macro is expected to generate 4.1 times less return on investment than VanEck Inflation. But when comparing it to its historical volatility, Simplify Macro Strategy is 1.01 times less risky than VanEck Inflation. It trades about 0.04 of its potential returns per unit of risk. VanEck Inflation Allocation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,794  in VanEck Inflation Allocation on December 29, 2024 and sell it today you would earn a total of  226.00  from holding VanEck Inflation Allocation or generate 8.09% return on investment over 90 days.

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

Simplify Macro Strategy  vs.  VanEck Inflation Allocation

Simplify Macro Strategy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Macro Strategy are ranked lower than 3 (%) 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.

VanEck Inflation All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Inflation Allocation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, VanEck Inflation may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Simplify Macro and VanEck Inflation

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

The idea behind Simplify Macro Strategy and VanEck Inflation Allocation 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.