Correlation Between Simplify Interest and Affinity World

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

By analyzing existing cross correlation between Simplify Interest Rate and Affinity World Leaders, you can compare the effects of market volatilities on Simplify Interest and Affinity World 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 Interest with a short position of Affinity World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Interest and Affinity World.

Diversification Opportunities for Simplify Interest and Affinity World

0.2

Correlation Coefficient

Simplify Interest  Affinity World

Modest diversification

The 3 months correlation between Simplify and Affinity is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Interest Rate and Affinity World Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity World Leaders and Simplify Interest 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 Interest Rate are associated (or correlated) with Affinity World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity World Leaders has no effect on the direction of Simplify Interest i.e., Simplify Interest and Affinity World go up and down completely randomly.

Pair Corralation between Simplify Interest and Affinity World

Given the investment horizon of 90 days Simplify Interest Rate is expected to under-perform the Affinity World. In addition to that, Simplify Interest is 2.5 times more volatile than Affinity World Leaders. It trades about -0.02 of its total potential returns per unit of risk. Affinity World Leaders is currently generating about -0.03 per unit of volatility. If you would invest  2,958  in Affinity World Leaders on December 30, 2024 and sell it today you would lose (68.00) from holding Affinity World Leaders or give up 2.3% of portfolio value over 90 days.

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

Simplify Interest Rate  vs.  Affinity World Leaders

Simplify Interest Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Interest Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Simplify Interest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Affinity World Leaders

Risk-Adjusted Performance

Very Weak

Over the last 90 days Affinity World Leaders has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Affinity World is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Simplify Interest and Affinity World

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

The idea behind Simplify Interest Rate and Affinity World Leaders 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.