Correlation Between Simplify Exchange and IShares 20

Can any of the company-specific risk be diversified away by investing in both Simplify Exchange and IShares 20 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 IShares 20 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 iShares 20 Year, you can compare the effects of market volatilities on Simplify Exchange and IShares 20 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 IShares 20. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and IShares 20.

Diversification Opportunities for Simplify Exchange and IShares 20

0.96

Correlation Coefficient

Simplify Exchange  IShares 20

Almost no diversification

The 3 months correlation between Simplify and IShares is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and iShares 20 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 20 Year 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 IShares 20. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 20 Year has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and IShares 20 go up and down completely randomly.

Pair Corralation between Simplify Exchange and IShares 20

Considering the 90-day investment horizon Simplify Exchange Traded is expected to generate 1.36 times more return on investment than IShares 20. However, Simplify Exchange is 1.36 times more volatile than iShares 20 Year. It trades about 0.14 of its potential returns per unit of risk. iShares 20 Year is currently generating about 0.1 per unit of risk. If you would invest  1,209  in Simplify Exchange Traded on December 21, 2024 and sell it today you would earn a total of  109.50  from holding Simplify Exchange Traded or generate 9.06% return on investment over 90 days.

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

Simplify Exchange Traded  vs.  iShares 20 Year

Simplify Exchange Traded

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Simplify Exchange may actually be approaching a critical reversion point that can send shares even higher in April 2025.

iShares 20 Year

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 20 Year are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, IShares 20 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Simplify Exchange and IShares 20

The main advantage of trading using opposite Simplify Exchange and IShares 20 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Exchange position performs unexpectedly, IShares 20 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 20 will offset losses from the drop in IShares 20's long position.

The idea behind Simplify Exchange Traded and iShares 20 Year 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.