Correlation Between Simplify Equity and IShares Ethereum

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

Diversification Opportunities for Simplify Equity and IShares Ethereum

0.97

Correlation Coefficient

Simplify Equity  IShares Ethereum

Almost no diversification

The 3 months correlation between Simplify and IShares is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and iShares Ethereum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ethereum Trust 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 IShares Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ethereum Trust has no effect on the direction of Simplify Equity i.e., Simplify Equity and IShares Ethereum go up and down completely randomly.

Pair Corralation between Simplify Equity and IShares Ethereum

Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 0.24 times more return on investment than IShares Ethereum. However, Simplify Equity PLUS is 4.17 times less risky than IShares Ethereum. It trades about 0.07 of its potential returns per unit of risk. iShares Ethereum Trust is currently generating about 0.01 per unit of risk. If you would invest  3,464  in Simplify Equity PLUS on October 13, 2024 and sell it today you would earn a total of  378.00  from holding Simplify Equity PLUS or generate 10.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	82.64%
Values	Daily Returns

Simplify Equity PLUS  vs.  iShares Ethereum Trust

Simplify Equity PLUS

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Simplify Equity is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Ethereum Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ethereum Trust are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical indicators, IShares Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simplify Equity and IShares Ethereum

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

The idea behind Simplify Equity PLUS and iShares Ethereum Trust 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.