Correlation Between Simplify Macro and Bon Natural

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

By analyzing existing cross correlation between Simplify Macro Strategy and Bon Natural Life, you can compare the effects of market volatilities on Simplify Macro and Bon Natural 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 Macro with a short position of Bon Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Macro and Bon Natural.

Diversification Opportunities for Simplify Macro and Bon Natural

0.07

Correlation Coefficient

Simplify Macro  Bon Natural

Significant diversification

The 3 months correlation between Simplify and Bon is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Macro Strategy and Bon Natural Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bon Natural Life and Simplify Macro 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 Macro Strategy are associated (or correlated) with Bon Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bon Natural Life has no effect on the direction of Simplify Macro i.e., Simplify Macro and Bon Natural go up and down completely randomly.

Pair Corralation between Simplify Macro and Bon Natural

Considering the 90-day investment horizon Simplify Macro Strategy is expected to generate 0.08 times more return on investment than Bon Natural. However, Simplify Macro Strategy is 12.34 times less risky than Bon Natural. It trades about 0.07 of its potential returns per unit of risk. Bon Natural Life is currently generating about -0.2 per unit of risk. If you would invest  2,115  in Simplify Macro Strategy on January 26, 2025 and sell it today you would earn a total of  129.00  from holding Simplify Macro Strategy or generate 6.1% return on investment over 90 days.

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

Simplify Macro Strategy  vs.  Bon Natural Life

Simplify Macro Strategy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Macro Strategy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Simplify Macro may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Bon Natural Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bon Natural Life has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Simplify Macro and Bon Natural

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

The idea behind Simplify Macro Strategy and Bon Natural Life 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.