Correlation Between Simplify Managed and Simplify Interest

Can any of the company-specific risk be diversified away by investing in both Simplify Managed and Simplify Interest 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 Simplify Interest 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 Simplify Interest Rate, you can compare the effects of market volatilities on Simplify Managed and Simplify Interest 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 Simplify Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Managed and Simplify Interest.

Diversification Opportunities for Simplify Managed and Simplify Interest

0.51

Correlation Coefficient

Simplify Managed  Simplify Interest

Very weak diversification

The 3 months correlation between Simplify and Simplify is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Managed Futures and Simplify Interest Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Interest Rate 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 Simplify Interest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Interest Rate has no effect on the direction of Simplify Managed i.e., Simplify Managed and Simplify Interest go up and down completely randomly.

Pair Corralation between Simplify Managed and Simplify Interest

Considering the 90-day investment horizon Simplify Managed Futures is expected to generate 0.39 times more return on investment than Simplify Interest. However, Simplify Managed Futures is 2.53 times less risky than Simplify Interest. It trades about -0.02 of its potential returns per unit of risk. Simplify Interest Rate is currently generating about -0.03 per unit of risk. If you would invest  2,725  in Simplify Managed Futures on May 16, 2025 and sell it today you would lose (35.00) from holding Simplify Managed Futures or give up 1.28% of portfolio value over 90 days.

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

Simplify Managed Futures  vs.  Simplify Interest Rate

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.

Simplify Interest Rate

Risk-Adjusted Performance

Weakest

Over the last 90 days Simplify Interest Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Simplify Interest 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 Managed and Simplify Interest

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

The idea behind Simplify Managed Futures and Simplify Interest Rate 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.