Correlation Between Simplify Exchange and US Treasury

Can any of the company-specific risk be diversified away by investing in both Simplify Exchange and US Treasury 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 US Treasury 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 US Treasury 12, you can compare the effects of market volatilities on Simplify Exchange and US Treasury 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 US Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and US Treasury.

Diversification Opportunities for Simplify Exchange and US Treasury

-0.58

Correlation Coefficient

Simplify Exchange  US Treasury

Excellent diversification

The 3 months correlation between Simplify and OBIL is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and US Treasury 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Treasury 12 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 US Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Treasury 12 has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and US Treasury go up and down completely randomly.

Pair Corralation between Simplify Exchange and US Treasury

Considering the 90-day investment horizon Simplify Exchange Traded is expected to generate 10.86 times more return on investment than US Treasury. However, Simplify Exchange is 10.86 times more volatile than US Treasury 12. It trades about 0.09 of its potential returns per unit of risk. US Treasury 12 is currently generating about 0.54 per unit of risk. If you would invest  2,119  in Simplify Exchange Traded on September 15, 2024 and sell it today you would earn a total of  16.00  from holding Simplify Exchange Traded or generate 0.76% return on investment over 90 days.

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

Simplify Exchange Traded  vs.  US Treasury 12

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 latest weak performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

US Treasury 12

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in US Treasury 12 are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, US Treasury is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Simplify Exchange and US Treasury

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

The idea behind Simplify Exchange Traded and US Treasury 12 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.