Correlation Between Simplify Asset and ProShares UltraShort

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

By analyzing existing cross correlation between Simplify Asset Management and ProShares UltraShort MSCI, you can compare the effects of market volatilities on Simplify Asset and ProShares UltraShort 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 Asset with a short position of ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Asset and ProShares UltraShort.

Diversification Opportunities for Simplify Asset and ProShares UltraShort

-0.41

Correlation Coefficient

Simplify Asset  ProShares UltraShort

Very good diversification

The 3 months correlation between Simplify and ProShares is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Asset Management and ProShares UltraShort MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort MSCI and Simplify Asset 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 Asset Management are associated (or correlated) with ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort MSCI has no effect on the direction of Simplify Asset i.e., Simplify Asset and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Simplify Asset and ProShares UltraShort

If you would invest  3,957  in ProShares UltraShort MSCI on September 12, 2024 and sell it today you would earn a total of  41.00  from holding ProShares UltraShort MSCI or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Simplify Asset Management  vs.  ProShares UltraShort MSCI

Simplify Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simplify Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ProShares UltraShort MSCI

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraShort MSCI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ProShares UltraShort is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Simplify Asset and ProShares UltraShort

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

The idea behind Simplify Asset Management and ProShares UltraShort MSCI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.