Correlation Between Simplify Equity and Fidelity Advantage

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

Diversification Opportunities for Simplify Equity and Fidelity Advantage

0.96

Correlation Coefficient

Simplify Equity  Fidelity Advantage

Almost no diversification

The 3 months correlation between Simplify and Fidelity is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Fidelity Advantage Ether in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advantage Ether 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 Fidelity Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advantage Ether has no effect on the direction of Simplify Equity i.e., Simplify Equity and Fidelity Advantage go up and down completely randomly.

Pair Corralation between Simplify Equity and Fidelity Advantage

Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 0.23 times more return on investment than Fidelity Advantage. However, Simplify Equity PLUS is 4.42 times less risky than Fidelity Advantage. It trades about 0.15 of its potential returns per unit of risk. Fidelity Advantage Ether is currently generating about 0.03 per unit of risk. If you would invest  1,890  in Simplify Equity PLUS on September 26, 2024 and sell it today you would earn a total of  2,111  from holding Simplify Equity PLUS or generate 111.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	22.18%
Values	Daily Returns

Simplify Equity PLUS  vs.  Fidelity Advantage Ether

Simplify Equity PLUS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, Simplify Equity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Advantage Ether

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advantage Ether are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Fidelity Advantage demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simplify Equity and Fidelity Advantage

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

The idea behind Simplify Equity PLUS and Fidelity Advantage Ether 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..