Correlation Between Simplify Bitcoin and Pacer Global

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

By analyzing existing cross correlation between Simplify Bitcoin Strategy and Pacer Global Cash, you can compare the effects of market volatilities on Simplify Bitcoin and Pacer Global 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 Bitcoin with a short position of Pacer Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Bitcoin and Pacer Global.

Diversification Opportunities for Simplify Bitcoin and Pacer Global

-0.71

Correlation Coefficient

Simplify Bitcoin  Pacer Global

Pay attention - limited upside

The 3 months correlation between Simplify and Pacer is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Bitcoin Strategy and Pacer Global Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Global Cash and Simplify Bitcoin 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 Bitcoin Strategy are associated (or correlated) with Pacer Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Global Cash has no effect on the direction of Simplify Bitcoin i.e., Simplify Bitcoin and Pacer Global go up and down completely randomly.

Pair Corralation between Simplify Bitcoin and Pacer Global

Given the investment horizon of 90 days Simplify Bitcoin Strategy is expected to generate 5.99 times more return on investment than Pacer Global. However, Simplify Bitcoin is 5.99 times more volatile than Pacer Global Cash. It trades about 0.23 of its potential returns per unit of risk. Pacer Global Cash is currently generating about -0.06 per unit of risk. If you would invest  1,866  in Simplify Bitcoin Strategy on August 30, 2024 and sell it today you would earn a total of  1,183  from holding Simplify Bitcoin Strategy or generate 63.4% return on investment over 90 days.

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

Simplify Bitcoin Strategy  vs.  Pacer Global Cash

Simplify Bitcoin Strategy

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Bitcoin Strategy are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Simplify Bitcoin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pacer Global Cash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacer Global Cash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Pacer Global 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 Simplify Bitcoin and Pacer Global

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

The idea behind Simplify Bitcoin Strategy and Pacer Global Cash 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.