Correlation Between IShares Trust and Simplify Exchange

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

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

Diversification Opportunities for IShares Trust and Simplify Exchange

0.31

Correlation Coefficient

IShares Trust  Simplify Exchange

Weak diversification

The 3 months correlation between IShares and Simplify is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 Trust 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 IShares Trust i.e., IShares Trust and Simplify Exchange go up and down completely randomly.

Pair Corralation between IShares Trust and Simplify Exchange

Given the investment horizon of 90 days iShares Trust is expected to under-perform the Simplify Exchange. But the etf apears to be less risky and, when comparing its historical volatility, iShares Trust is 1.42 times less risky than Simplify Exchange. The etf trades about 0.0 of its potential returns per unit of risk. The Simplify Exchange Traded is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,316  in Simplify Exchange Traded on October 20, 2024 and sell it today you would earn a total of  18.00  from holding Simplify Exchange Traded or generate 0.78% return on investment over 90 days.

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

iShares Trust   vs.  Simplify Exchange Traded

iShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Simplify Exchange Traded

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 2 (%) 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.

Pair Trading with IShares Trust and Simplify Exchange

The main advantage of trading using opposite IShares Trust and Simplify Exchange positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 iShares Trust 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.