Correlation Between Simplify Exchange and Pacer Lunt

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

Diversification Opportunities for Simplify Exchange and Pacer Lunt

-0.78

Correlation Coefficient

Simplify Exchange  Pacer Lunt

Pay attention - limited upside

The 3 months correlation between Simplify and Pacer is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and Pacer Lunt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Lunt Large 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 Pacer Lunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Lunt Large has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and Pacer Lunt go up and down completely randomly.

Pair Corralation between Simplify Exchange and Pacer Lunt

Considering the 90-day investment horizon Simplify Exchange Traded is expected to under-perform the Pacer Lunt. But the etf apears to be less risky and, when comparing its historical volatility, Simplify Exchange Traded is 1.36 times less risky than Pacer Lunt. The etf trades about -0.23 of its potential returns per unit of risk. The Pacer Lunt Large is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,924  in Pacer Lunt Large on September 16, 2024 and sell it today you would earn a total of  189.00  from holding Pacer Lunt Large or generate 3.84% return on investment over 90 days.

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

Simplify Exchange Traded  vs.  Pacer Lunt Large

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.

Pacer Lunt Large

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacer Lunt Large are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Pacer Lunt is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Simplify Exchange and Pacer Lunt

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

The idea behind Simplify Exchange Traded and Pacer Lunt Large 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.