Correlation Between Dimensional ETF and Simplify Interest

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Can any of the company-specific risk be diversified away by investing in both Dimensional ETF 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 Dimensional ETF and Simplify Interest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional ETF Trust and Simplify Interest Rate, you can compare the effects of market volatilities on Dimensional ETF 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 Dimensional ETF with a short position of Simplify Interest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Simplify Interest.

Diversification Opportunities for Dimensional ETF and Simplify Interest

-0.39
  Correlation Coefficient

Very good diversification

The 3 months correlation between Dimensional and Simplify is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust 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 Dimensional ETF 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 Dimensional ETF Trust 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 Dimensional ETF i.e., Dimensional ETF and Simplify Interest go up and down completely randomly.

Pair Corralation between Dimensional ETF and Simplify Interest

Given the investment horizon of 90 days Dimensional ETF is expected to generate 9.35 times less return on investment than Simplify Interest. But when comparing it to its historical volatility, Dimensional ETF Trust is 8.14 times less risky than Simplify Interest. It trades about 0.08 of its potential returns per unit of risk. Simplify Interest Rate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,239  in Simplify Interest Rate on April 28, 2025 and sell it today you would earn a total of  651.00  from holding Simplify Interest Rate or generate 12.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Dimensional ETF Trust  vs.  Simplify Interest Rate

 Performance 
       Timeline  
Dimensional ETF Trust 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Dimensional ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Simplify Interest Rate 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Interest Rate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, Simplify Interest showed solid returns over the last few months and may actually be approaching a breakup point.

Dimensional ETF and Simplify Interest Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dimensional ETF and Simplify Interest

The main advantage of trading using opposite Dimensional ETF and Simplify Interest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF 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 Dimensional ETF Trust 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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