Correlation Between Simplify Propel and Simplify Exchange

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

By analyzing existing cross correlation between Simplify Propel Opportunities and Simplify Exchange Traded, you can compare the effects of market volatilities on Simplify Propel and Simplify Exchange 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 Propel with a short position of Simplify Exchange. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Propel and Simplify Exchange.

Diversification Opportunities for Simplify Propel and Simplify Exchange

-0.23

Correlation Coefficient

Simplify Propel  Simplify Exchange

Very good diversification

The 3 months correlation between Simplify and Simplify is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Propel Opportunities and Simplify Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Exchange Traded and Simplify Propel 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 Propel Opportunities are associated (or correlated) with Simplify Exchange. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Exchange Traded has no effect on the direction of Simplify Propel i.e., Simplify Propel and Simplify Exchange go up and down completely randomly.

Pair Corralation between Simplify Propel and Simplify Exchange

Given the investment horizon of 90 days Simplify Propel Opportunities is expected to under-perform the Simplify Exchange. In addition to that, Simplify Propel is 5.71 times more volatile than Simplify Exchange Traded. It trades about -0.07 of its total potential returns per unit of risk. Simplify Exchange Traded is currently generating about -0.15 per unit of volatility. If you would invest  2,266  in Simplify Exchange Traded on September 5, 2024 and sell it today you would lose (115.00) from holding Simplify Exchange Traded or give up 5.08% of portfolio value over 90 days.

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

Simplify Propel Opportunities  vs.  Simplify Exchange Traded

Simplify Propel Oppo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simplify Propel Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the Etf traders.

Simplify Exchange Traded

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simplify Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Exchange 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 Propel and Simplify Exchange

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

The idea behind Simplify Propel Opportunities and Simplify Exchange Traded 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.