Correlation Between Simplify Volt and SPDR SP

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

By analyzing existing cross correlation between Simplify Volt RoboCar and SPDR SP Kensho, you can compare the effects of market volatilities on Simplify Volt and SPDR SP 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 Volt with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Volt and SPDR SP.

Diversification Opportunities for Simplify Volt and SPDR SP

0.58

Correlation Coefficient

Simplify Volt  SPDR SP

Very weak diversification

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

Pair Corralation between Simplify Volt and SPDR SP

Given the investment horizon of 90 days Simplify Volt RoboCar is expected to generate 3.23 times more return on investment than SPDR SP. However, Simplify Volt is 3.23 times more volatile than SPDR SP Kensho. It trades about 0.28 of its potential returns per unit of risk. SPDR SP Kensho is currently generating about 0.02 per unit of risk. If you would invest  1,785  in Simplify Volt RoboCar on October 4, 2024 and sell it today you would earn a total of  600.00  from holding Simplify Volt RoboCar or generate 33.61% return on investment over 90 days.

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

Simplify Volt RoboCar  vs.  SPDR SP Kensho

Simplify Volt RoboCar

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volt RoboCar are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Simplify Volt reported solid returns over the last few months and may actually be approaching a breakup point.

SPDR SP Kensho

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR SP Kensho has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, SPDR SP is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Simplify Volt and SPDR SP

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

The idea behind Simplify Volt RoboCar and SPDR SP Kensho 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.