Correlation Between IShares SP and Simplify Next

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

By analyzing existing cross correlation between iShares SP 500 and Simplify Next Intangible, you can compare the effects of market volatilities on IShares SP and Simplify Next 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 SP with a short position of Simplify Next. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and Simplify Next.

Diversification Opportunities for IShares SP and Simplify Next

0.88

Correlation Coefficient

IShares SP  Simplify Next

Very poor diversification

The 3 months correlation between IShares and Simplify is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 and Simplify Next Intangible in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Next Intangible and IShares SP 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 SP 500 are associated (or correlated) with Simplify Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Next Intangible has no effect on the direction of IShares SP i.e., IShares SP and Simplify Next go up and down completely randomly.

Pair Corralation between IShares SP and Simplify Next

Considering the 90-day investment horizon iShares SP 500 is expected to under-perform the Simplify Next. But the etf apears to be less risky and, when comparing its historical volatility, iShares SP 500 is 1.15 times less risky than Simplify Next. The etf trades about -0.01 of its potential returns per unit of risk. The Simplify Next Intangible is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,513  in Simplify Next Intangible on December 29, 2024 and sell it today you would earn a total of  32.00  from holding Simplify Next Intangible or generate 1.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

iShares SP 500  vs.  Simplify Next Intangible

iShares SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares SP is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Simplify Next Intangible

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Next Intangible are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Simplify Next is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with IShares SP and Simplify Next

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

The idea behind iShares SP 500 and Simplify Next Intangible 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.