Correlation Between Simplify Equity and Syntax

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

Diversification Opportunities for Simplify Equity and Syntax

-0.08

Correlation Coefficient

Simplify Equity  Syntax

Good diversification

The 3 months correlation between Simplify and Syntax is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Syntax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Syntax 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 Syntax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Syntax has no effect on the direction of Simplify Equity i.e., Simplify Equity and Syntax go up and down completely randomly.

Pair Corralation between Simplify Equity and Syntax

Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 1.32 times more return on investment than Syntax. However, Simplify Equity is 1.32 times more volatile than Syntax. It trades about 0.08 of its potential returns per unit of risk. Syntax is currently generating about 0.08 per unit of risk. If you would invest  3,111  in Simplify Equity PLUS on October 3, 2024 and sell it today you would earn a total of  982.00  from holding Simplify Equity PLUS or generate 31.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.03%
Values	Daily Returns

Simplify Equity PLUS  vs.  Syntax

Simplify Equity PLUS

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, Simplify Equity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Syntax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Simplify Equity and Syntax

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

The idea behind Simplify Equity PLUS and Syntax 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.

Check out your portfolio center.

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 Stocks Directory module to find actively traded stocks across global markets.