Correlation Between Simplify Volt and ProShares

Can any of the company-specific risk be diversified away by investing in both Simplify Volt and ProShares 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 ProShares 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 ProShares SP 500, you can compare the effects of market volatilities on Simplify Volt and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Volt and ProShares.

Diversification Opportunities for Simplify Volt and ProShares

0.44

Correlation Coefficient

Simplify Volt  ProShares

Very weak diversification

The 3 months correlation between Simplify and ProShares is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Volt RoboCar and ProShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP 500 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP 500 has no effect on the direction of Simplify Volt i.e., Simplify Volt and ProShares go up and down completely randomly.

Pair Corralation between Simplify Volt and ProShares

Given the investment horizon of 90 days Simplify Volt RoboCar is expected to under-perform the ProShares. In addition to that, Simplify Volt is 3.41 times more volatile than ProShares SP 500. It trades about -0.03 of its total potential returns per unit of risk. ProShares SP 500 is currently generating about 0.01 per unit of volatility. If you would invest  6,437  in ProShares SP 500 on October 23, 2024 and sell it today you would earn a total of  3.00  from holding ProShares SP 500 or generate 0.05% 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.  ProShares SP 500

Simplify Volt RoboCar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volt RoboCar are ranked lower than 20 (%) 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.

ProShares SP 500

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares SP 500 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ProShares 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 Volt and ProShares

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

The idea behind Simplify Volt RoboCar and ProShares SP 500 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.