Correlation Between TCW ETF and Simplify Propel

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

By analyzing existing cross correlation between TCW ETF Trust and Simplify Propel Opportunities, you can compare the effects of market volatilities on TCW ETF and Simplify Propel 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 TCW ETF with a short position of Simplify Propel. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCW ETF and Simplify Propel.

Diversification Opportunities for TCW ETF and Simplify Propel

0.44

Correlation Coefficient

TCW ETF  Simplify Propel

Very weak diversification

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

Pair Corralation between TCW ETF and Simplify Propel

Given the investment horizon of 90 days TCW ETF Trust is expected to under-perform the Simplify Propel. But the etf apears to be less risky and, when comparing its historical volatility, TCW ETF Trust is 2.07 times less risky than Simplify Propel. The etf trades about -0.06 of its potential returns per unit of risk. The Simplify Propel Opportunities is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,586  in Simplify Propel Opportunities on December 27, 2024 and sell it today you would earn a total of  19.00  from holding Simplify Propel Opportunities or generate 1.2% return on investment over 90 days.

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

TCW ETF Trust  vs.  Simplify Propel Opportunities

TCW ETF Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days TCW ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TCW ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Simplify Propel Oppo

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Propel Opportunities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Simplify Propel is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with TCW ETF and Simplify Propel

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

The idea behind TCW ETF Trust and Simplify Propel Opportunities 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.