Correlation Between Simplify Exchange and ETF Series
Can any of the company-specific risk be diversified away by investing in both Simplify Exchange and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Simplify Exchange and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Exchange and ETF Series.
Diversification Opportunities for Simplify Exchange and ETF Series
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Simplify and ETF is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and ETF Series go up and down completely randomly.
Pair Corralation between Simplify Exchange and ETF Series
Given the investment horizon of 90 days Simplify Exchange is expected to generate 3.37 times less return on investment than ETF Series. But when comparing it to its historical volatility, Simplify Exchange Traded is 1.37 times less risky than ETF Series. It trades about 0.07 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,242 in ETF Series Solutions on March 12, 2025 and sell it today you would earn a total of 399.00 from holding ETF Series Solutions or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simplify Exchange Traded vs. ETF Series Solutions
Performance |
| Timeline |
| Simplify Exchange Traded |
| ETF Series Solutions |
Simplify Exchange and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simplify Exchange and ETF Series
The main advantage of trading using opposite Simplify Exchange and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Exchange position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' long position.| Simplify Exchange vs. Simplify Equity PLUS | Simplify Exchange vs. Simplify Volatility Premium | Simplify Exchange vs. Simplify Exchange Traded | Simplify Exchange vs. Simplify Equity PLUS |
| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series vs. First Trust Exchange Traded |
Check out your portfolio center.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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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