Correlation Between IShares ESG and Simplify Volatility

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

By analyzing existing cross correlation between iShares ESG Aware and Simplify Volatility Premium, you can compare the effects of market volatilities on IShares ESG and Simplify Volatility 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 IShares ESG with a short position of Simplify Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ESG and Simplify Volatility.

Diversification Opportunities for IShares ESG and Simplify Volatility

0.53

Correlation Coefficient

IShares ESG  Simplify Volatility

Very weak diversification

The 3 months correlation between IShares and Simplify is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Aware and Simplify Volatility Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volatility and IShares ESG 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 iShares ESG Aware are associated (or correlated) with Simplify Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volatility has no effect on the direction of IShares ESG i.e., IShares ESG and Simplify Volatility go up and down completely randomly.

Pair Corralation between IShares ESG and Simplify Volatility

Given the investment horizon of 90 days iShares ESG Aware is expected to generate 0.27 times more return on investment than Simplify Volatility. However, iShares ESG Aware is 3.68 times less risky than Simplify Volatility. It trades about 0.26 of its potential returns per unit of risk. Simplify Volatility Premium is currently generating about 0.05 per unit of risk. If you would invest  12,274  in iShares ESG Aware on May 3, 2025 and sell it today you would earn a total of  1,550  from holding iShares ESG Aware or generate 12.63% return on investment over 90 days.

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

iShares ESG Aware  vs.  Simplify Volatility Premium

iShares ESG Aware

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Aware are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Simplify Volatility

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volatility Premium are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Simplify Volatility may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with IShares ESG and Simplify Volatility

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

The idea behind iShares ESG Aware and Simplify Volatility Premium 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 Global Correlations module to find global opportunities by holding instruments from different markets.