Correlation Between Simplify Volatility and IShares Trust

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

By analyzing existing cross correlation between Simplify Volatility Premium and iShares Trust , you can compare the effects of market volatilities on Simplify Volatility and IShares Trust 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 Volatility with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Volatility and IShares Trust.

Diversification Opportunities for Simplify Volatility and IShares Trust

0.07

Correlation Coefficient

Simplify Volatility  IShares Trust

Significant diversification

The 3 months correlation between Simplify and IShares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Volatility Premium and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and Simplify Volatility 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 Volatility Premium are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Simplify Volatility i.e., Simplify Volatility and IShares Trust go up and down completely randomly.

Pair Corralation between Simplify Volatility and IShares Trust

Given the investment horizon of 90 days Simplify Volatility Premium is expected to under-perform the IShares Trust. In addition to that, Simplify Volatility is 8.36 times more volatile than iShares Trust . It trades about -0.11 of its total potential returns per unit of risk. iShares Trust is currently generating about 0.06 per unit of volatility. If you would invest  3,124  in iShares Trust on December 30, 2024 and sell it today you would earn a total of  22.00  from holding iShares Trust or generate 0.7% return on investment over 90 days.

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

Simplify Volatility Premium  vs.  iShares Trust

Simplify Volatility

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Volatility Premium has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

iShares Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, IShares Trust is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Simplify Volatility and IShares Trust

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

The idea behind Simplify Volatility Premium and iShares 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.