Correlation Between Simplify Equity and IShares Blockchain

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

Diversification Opportunities for Simplify Equity and IShares Blockchain

0.97

Correlation Coefficient

Simplify Equity  IShares Blockchain

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 Blockchain and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Blockchain and 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 Blockchain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Blockchain and has no effect on the direction of Simplify Equity i.e., Simplify Equity and IShares Blockchain go up and down completely randomly.

Pair Corralation between Simplify Equity and IShares Blockchain

Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 0.25 times more return on investment than IShares Blockchain. However, Simplify Equity PLUS is 4.01 times less risky than IShares Blockchain. It trades about -0.03 of its potential returns per unit of risk. iShares Blockchain and is currently generating about -0.04 per unit of risk. If you would invest  3,957  in Simplify Equity PLUS on September 22, 2024 and sell it today you would lose (33.00) from holding Simplify Equity PLUS or give up 0.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Simplify Equity PLUS  vs.  iShares Blockchain and

Simplify Equity PLUS

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 10 (%) 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.

iShares Blockchain and

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Blockchain and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, IShares Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Simplify Equity and IShares Blockchain

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

The idea behind Simplify Equity PLUS and iShares Blockchain and 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.