Correlation Between Simplify Exchange and Quadratic Deflation

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

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

Diversification Opportunities for Simplify Exchange and Quadratic Deflation

0.42

Correlation Coefficient

Simplify Exchange  Quadratic Deflation

Very weak diversification

The 3 months correlation between Simplify and Quadratic is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and Quadratic Deflation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quadratic Deflation ETF and Simplify Exchange 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 Exchange Traded are associated (or correlated) with Quadratic Deflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quadratic Deflation ETF has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and Quadratic Deflation go up and down completely randomly.

Pair Corralation between Simplify Exchange and Quadratic Deflation

Considering the 90-day investment horizon Simplify Exchange Traded is expected to under-perform the Quadratic Deflation. But the etf apears to be less risky and, when comparing its historical volatility, Simplify Exchange Traded is 1.04 times less risky than Quadratic Deflation. The etf trades about -0.02 of its potential returns per unit of risk. The Quadratic Deflation ETF is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,417  in Quadratic Deflation ETF on October 5, 2024 and sell it today you would lose (65.00) from holding Quadratic Deflation ETF or give up 4.59% of portfolio value over 90 days.

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

Simplify Exchange Traded  vs.  Quadratic Deflation ETF

Simplify Exchange Traded

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simplify Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Exchange is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Quadratic Deflation ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quadratic Deflation ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Quadratic Deflation is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Simplify Exchange and Quadratic Deflation

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

The idea behind Simplify Exchange Traded and Quadratic Deflation ETF 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.