Correlation Between Simplify Macro and ProShares Nanotechnology

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

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

Diversification Opportunities for Simplify Macro and ProShares Nanotechnology

-0.34

Correlation Coefficient

Simplify Macro  ProShares Nanotechnology

Very good diversification

The 3 months correlation between Simplify and ProShares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Macro Strategy and ProShares Nanotechnology ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Nanotechnology and Simplify Macro 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 Macro Strategy are associated (or correlated) with ProShares Nanotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Nanotechnology has no effect on the direction of Simplify Macro i.e., Simplify Macro and ProShares Nanotechnology go up and down completely randomly.

Pair Corralation between Simplify Macro and ProShares Nanotechnology

Considering the 90-day investment horizon Simplify Macro Strategy is expected to generate 0.45 times more return on investment than ProShares Nanotechnology. However, Simplify Macro Strategy is 2.22 times less risky than ProShares Nanotechnology. It trades about 0.14 of its potential returns per unit of risk. ProShares Nanotechnology ETF is currently generating about 0.0 per unit of risk. If you would invest  2,110  in Simplify Macro Strategy on September 2, 2024 and sell it today you would earn a total of  149.00  from holding Simplify Macro Strategy or generate 7.06% return on investment over 90 days.

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

Simplify Macro Strategy  vs.  ProShares Nanotechnology ETF

Simplify Macro Strategy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Macro Strategy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Simplify Macro may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ProShares Nanotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProShares Nanotechnology ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, ProShares Nanotechnology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simplify Macro and ProShares Nanotechnology

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

The idea behind Simplify Macro Strategy and ProShares Nanotechnology ETF 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.