Correlation Between Simplify Managed and First Trust

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

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

Diversification Opportunities for Simplify Managed and First Trust

0.67

Correlation Coefficient

Simplify Managed  First Trust

Poor diversification

The 3 months correlation between Simplify and First is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Managed Futures and First Trust Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Managed and Simplify Managed 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 Managed Futures are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Managed has no effect on the direction of Simplify Managed i.e., Simplify Managed and First Trust go up and down completely randomly.

Pair Corralation between Simplify Managed and First Trust

Considering the 90-day investment horizon Simplify Managed is expected to generate 1.06 times less return on investment than First Trust. In addition to that, Simplify Managed is 1.54 times more volatile than First Trust Managed. It trades about 0.03 of its total potential returns per unit of risk. First Trust Managed is currently generating about 0.05 per unit of volatility. If you would invest  4,366  in First Trust Managed on September 22, 2025 and sell it today you would earn a total of  323.00  from holding First Trust Managed or generate 7.4% return on investment over 90 days.

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

Simplify Managed Futures  vs.  First Trust Managed

Simplify Managed Futures

Risk-Adjusted Performance

Weakest

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

First Trust Managed

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Managed are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, First Trust is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Simplify Managed and First Trust

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

The idea behind Simplify Managed Futures and First Trust Managed 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.