Correlation Between IShares Biotechnology and Simplify Propel

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

By analyzing existing cross correlation between iShares Biotechnology ETF and Simplify Propel Opportunities, you can compare the effects of market volatilities on IShares Biotechnology and Simplify Propel 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 IShares Biotechnology with a short position of Simplify Propel. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Biotechnology and Simplify Propel.

Diversification Opportunities for IShares Biotechnology and Simplify Propel

0.0

Correlation Coefficient

IShares Biotechnology  Simplify Propel

Pay attention - limited upside

The 3 months correlation between IShares and Simplify is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Biotechnology ETF and Simplify Propel Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Propel Oppo and IShares Biotechnology 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 iShares Biotechnology ETF are associated (or correlated) with Simplify Propel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Propel Oppo has no effect on the direction of IShares Biotechnology i.e., IShares Biotechnology and Simplify Propel go up and down completely randomly.

Pair Corralation between IShares Biotechnology and Simplify Propel

If you would invest (100.00) in Simplify Propel Opportunities on October 10, 2024 and sell it today you would earn a total of  100.00  from holding Simplify Propel Opportunities or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

iShares Biotechnology ETF  vs.  Simplify Propel Opportunities

iShares Biotechnology ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Biotechnology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, IShares Biotechnology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Simplify Propel Oppo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simplify Propel Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Simplify Propel is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with IShares Biotechnology and Simplify Propel

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

The idea behind iShares Biotechnology ETF and Simplify Propel Opportunities 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.