Correlation Between IShares Core and Simplify Volt

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

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

Diversification Opportunities for IShares Core and Simplify Volt

0.9

Correlation Coefficient

IShares Core  Simplify Volt

Almost no diversification

The 3 months correlation between IShares and Simplify is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Simplify Volt RoboCar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volt RoboCar and IShares Core 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 Core SP are associated (or correlated) with Simplify Volt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volt RoboCar has no effect on the direction of IShares Core i.e., IShares Core and Simplify Volt go up and down completely randomly.

Pair Corralation between IShares Core and Simplify Volt

Given the investment horizon of 90 days IShares Core is expected to generate 11.95 times less return on investment than Simplify Volt. But when comparing it to its historical volatility, iShares Core SP is 5.33 times less risky than Simplify Volt. It trades about 0.14 of its potential returns per unit of risk. Simplify Volt RoboCar is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,805  in Simplify Volt RoboCar on September 22, 2024 and sell it today you would earn a total of  726.00  from holding Simplify Volt RoboCar or generate 40.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

iShares Core SP  vs.  Simplify Volt RoboCar

iShares Core SP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Simplify Volt RoboCar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volt RoboCar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Simplify Volt reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and Simplify Volt

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

The idea behind iShares Core SP and Simplify Volt RoboCar 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.