Correlation Between Simplify Interest and Global X

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

By analyzing existing cross correlation between Simplify Interest Rate and Global X SuperDividend, you can compare the effects of market volatilities on Simplify Interest and Global X 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 Interest with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Interest and Global X.

Diversification Opportunities for Simplify Interest and Global X

-0.3

Correlation Coefficient

Simplify Interest  Global X

Very good diversification

The 3 months correlation between Simplify and Global is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Interest Rate and Global X SuperDividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X SuperDividend and Simplify Interest 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 Interest Rate are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X SuperDividend has no effect on the direction of Simplify Interest i.e., Simplify Interest and Global X go up and down completely randomly.

Pair Corralation between Simplify Interest and Global X

Given the investment horizon of 90 days Simplify Interest Rate is expected to generate 2.76 times more return on investment than Global X. However, Simplify Interest is 2.76 times more volatile than Global X SuperDividend. It trades about 0.08 of its potential returns per unit of risk. Global X SuperDividend is currently generating about 0.0 per unit of risk. If you would invest  4,117  in Simplify Interest Rate on September 2, 2024 and sell it today you would earn a total of  440.00  from holding Simplify Interest Rate or generate 10.69% return on investment over 90 days.

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

Simplify Interest Rate  vs.  Global X SuperDividend

Simplify Interest Rate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Interest Rate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, Simplify Interest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Global X SuperDividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global X SuperDividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Global X is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Simplify Interest and Global X

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

The idea behind Simplify Interest Rate and Global X SuperDividend 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.