Correlation Between Simplify Exchange and AB Ultra

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

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

Diversification Opportunities for Simplify Exchange and AB Ultra

0.07

Correlation Coefficient

Simplify Exchange  AB Ultra

Significant diversification

The 3 months correlation between Simplify and YEAR is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and AB Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Ultra Short and Simplify Exchange 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 Exchange Traded are associated (or correlated) with AB Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Ultra Short has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and AB Ultra go up and down completely randomly.

Pair Corralation between Simplify Exchange and AB Ultra

Given the investment horizon of 90 days Simplify Exchange Traded is expected to generate 8.61 times more return on investment than AB Ultra. However, Simplify Exchange is 8.61 times more volatile than AB Ultra Short. It trades about 0.06 of its potential returns per unit of risk. AB Ultra Short is currently generating about 0.29 per unit of risk. If you would invest  2,317  in Simplify Exchange Traded on October 25, 2024 and sell it today you would earn a total of  39.00  from holding Simplify Exchange Traded or generate 1.68% return on investment over 90 days.

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

Simplify Exchange Traded  vs.  AB Ultra Short

Simplify Exchange Traded

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, Simplify Exchange is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

AB Ultra Short

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AB Ultra Short are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, AB Ultra is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Simplify Exchange and AB Ultra

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

The idea behind Simplify Exchange Traded and AB Ultra Short 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.