Correlation Between Swan Hedged and Simplify Exchange

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

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

Diversification Opportunities for Swan Hedged and Simplify Exchange

0.99

Correlation Coefficient

Swan Hedged  Simplify Exchange

No risk reduction

The 3 months correlation between Swan and Simplify is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Swan Hedged Equity and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded and Swan Hedged 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 Swan Hedged Equity are associated (or correlated) with Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of Swan Hedged i.e., Swan Hedged and Simplify Exchange go up and down completely randomly.

Pair Corralation between Swan Hedged and Simplify Exchange

Given the investment horizon of 90 days Swan Hedged Equity is expected to generate 0.85 times more return on investment than Simplify Exchange. However, Swan Hedged Equity is 1.18 times less risky than Simplify Exchange. It trades about -0.09 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about -0.08 per unit of risk. If you would invest  2,268  in Swan Hedged Equity on December 21, 2024 and sell it today you would lose (69.00) from holding Swan Hedged Equity or give up 3.04% of portfolio value over 90 days.

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

Swan Hedged Equity  vs.  Simplify Exchange Traded

Swan Hedged Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Swan Hedged Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Swan Hedged is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Simplify Exchange Traded

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Simplify Exchange is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Swan Hedged and Simplify Exchange

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

The idea behind Swan Hedged Equity and Simplify Exchange Traded 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.