Correlation Between Simplify Bitcoin and Pacer Cash

Can any of the company-specific risk be diversified away by investing in both Simplify Bitcoin and Pacer Cash 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 Cash 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 Cash Cows, you can compare the effects of market volatilities on Simplify Bitcoin and Pacer Cash 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 Cash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Bitcoin and Pacer Cash.

Diversification Opportunities for Simplify Bitcoin and Pacer Cash

0.4

Correlation Coefficient

Simplify Bitcoin  Pacer Cash

Very weak diversification

The 3 months correlation between Simplify and Pacer is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Bitcoin Strategy and Pacer Cash Cows in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Cash Cows 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 Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Cash Cows has no effect on the direction of Simplify Bitcoin i.e., Simplify Bitcoin and Pacer Cash go up and down completely randomly.

Pair Corralation between Simplify Bitcoin and Pacer Cash

Given the investment horizon of 90 days Simplify Bitcoin Strategy is expected to generate 3.67 times more return on investment than Pacer Cash. However, Simplify Bitcoin is 3.67 times more volatile than Pacer Cash Cows. It trades about 0.07 of its potential returns per unit of risk. Pacer Cash Cows is currently generating about 0.05 per unit of risk. If you would invest  843.00  in Simplify Bitcoin Strategy on December 3, 2024 and sell it today you would earn a total of  1,436  from holding Simplify Bitcoin Strategy or generate 170.34% return on investment over 90 days.

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

Simplify Bitcoin Strategy  vs.  Pacer Cash Cows

Simplify Bitcoin Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Bitcoin Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Pacer Cash Cows

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Simplify Bitcoin and Pacer Cash

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

The idea behind Simplify Bitcoin Strategy and Pacer Cash Cows 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.