Correlation Between Exchange Listed and Simplify Equity

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

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

Diversification Opportunities for Exchange Listed and Simplify Equity

0.94

Correlation Coefficient

Exchange Listed  Simplify Equity

Almost no diversification

The 3 months correlation between Exchange and Simplify is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Listed Funds and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS and Exchange Listed 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 Exchange Listed Funds are associated (or correlated) with Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of Exchange Listed i.e., Exchange Listed and Simplify Equity go up and down completely randomly.

Pair Corralation between Exchange Listed and Simplify Equity

Given the investment horizon of 90 days Exchange Listed Funds is expected to generate 0.49 times more return on investment than Simplify Equity. However, Exchange Listed Funds is 2.06 times less risky than Simplify Equity. It trades about -0.01 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about -0.02 per unit of risk. If you would invest  7,970  in Exchange Listed Funds on October 18, 2024 and sell it today you would lose (58.00) from holding Exchange Listed Funds or give up 0.73% of portfolio value over 90 days.

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

Exchange Listed Funds  vs.  Simplify Equity PLUS

Exchange Listed Funds

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Exchange Listed and Simplify Equity

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

The idea behind Exchange Listed Funds and Simplify Equity PLUS 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 CEOs Directory module to screen CEOs from public companies around the world.