Correlation Between Dimensional International and Simplify Equity

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

By analyzing existing cross correlation between Dimensional International High and Simplify Equity PLUS, you can compare the effects of market volatilities on Dimensional International and Simplify Equity 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 International with a short position of Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and Simplify Equity.

Diversification Opportunities for Dimensional International and Simplify Equity

0.82

Correlation Coefficient

Dimensional International  Simplify Equity

Very poor diversification

The 3 months correlation between Dimensional and Simplify is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS and Dimensional International 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 International High are associated (or correlated) with Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of Dimensional International i.e., Dimensional International and Simplify Equity go up and down completely randomly.

Pair Corralation between Dimensional International and Simplify Equity

Given the investment horizon of 90 days Dimensional International is expected to generate 4.03 times less return on investment than Simplify Equity. But when comparing it to its historical volatility, Dimensional International High is 1.92 times less risky than Simplify Equity. It trades about 0.1 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,854  in Simplify Equity PLUS on May 8, 2025 and sell it today you would earn a total of  759.00  from holding Simplify Equity PLUS or generate 19.69% return on investment over 90 days.

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

Dimensional International High  vs.  Simplify Equity PLUS

Dimensional International

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional International High are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Dimensional International is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Simplify Equity PLUS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Simplify Equity exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dimensional International and Simplify Equity

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

The idea behind Dimensional International High and Simplify Equity PLUS 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 Anywhere module to track or share privately all of your investments from the convenience of any device.