Correlation Between Simplify Equity and Valkyrie Bitcoin

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

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

Diversification Opportunities for Simplify Equity and Valkyrie Bitcoin

0.75

Correlation Coefficient

Simplify Equity  Valkyrie Bitcoin

Poor diversification

The 3 months correlation between Simplify and Valkyrie is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Valkyrie Bitcoin Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valkyrie Bitcoin Strategy and Simplify Equity 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 Equity PLUS are associated (or correlated) with Valkyrie Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valkyrie Bitcoin Strategy has no effect on the direction of Simplify Equity i.e., Simplify Equity and Valkyrie Bitcoin go up and down completely randomly.

Pair Corralation between Simplify Equity and Valkyrie Bitcoin

Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 0.34 times more return on investment than Valkyrie Bitcoin. However, Simplify Equity PLUS is 2.96 times less risky than Valkyrie Bitcoin. It trades about -0.09 of its potential returns per unit of risk. Valkyrie Bitcoin Strategy is currently generating about -0.15 per unit of risk. If you would invest  3,930  in Simplify Equity PLUS on December 22, 2024 and sell it today you would lose (251.00) from holding Simplify Equity PLUS or give up 6.39% of portfolio value over 90 days.

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

Simplify Equity PLUS  vs.  Valkyrie Bitcoin Strategy

Simplify Equity PLUS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Equity PLUS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Valkyrie Bitcoin Strategy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valkyrie Bitcoin Strategy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

Pair Trading with Simplify Equity and Valkyrie Bitcoin

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

The idea behind Simplify Equity PLUS and Valkyrie Bitcoin Strategy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.