Correlation Between Simplify Exchange and FlexShares Real

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

Diversification Opportunities for Simplify Exchange and FlexShares Real

-0.74

Correlation Coefficient

Simplify Exchange  FlexShares Real

Pay attention - limited upside

The 3 months correlation between Simplify and FlexShares is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded and FlexShares Real Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShares Real Assets 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 FlexShares Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShares Real Assets has no effect on the direction of Simplify Exchange i.e., Simplify Exchange and FlexShares Real go up and down completely randomly.

Pair Corralation between Simplify Exchange and FlexShares Real

Considering the 90-day investment horizon Simplify Exchange Traded is expected to generate 1.26 times more return on investment than FlexShares Real. However, Simplify Exchange is 1.26 times more volatile than FlexShares Real Assets. It trades about 0.21 of its potential returns per unit of risk. FlexShares Real Assets is currently generating about -0.17 per unit of risk. If you would invest  2,578  in Simplify Exchange Traded on September 22, 2024 and sell it today you would earn a total of  292.00  from holding Simplify Exchange Traded or generate 11.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Simplify Exchange Traded  vs.  FlexShares Real Assets

Simplify Exchange Traded

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Simplify Exchange may actually be approaching a critical reversion point that can send shares even higher in January 2025.

FlexShares Real Assets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FlexShares Real Assets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Simplify Exchange and FlexShares Real

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

The idea behind Simplify Exchange Traded and FlexShares Real Assets 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.