Correlation Between Simplify Macro and Resideo Technologies

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

Diversification Opportunities for Simplify Macro and Resideo Technologies

0.11

Correlation Coefficient

Simplify Macro  Resideo Technologies

Average diversification

The 3 months correlation between Simplify and Resideo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Macro Strategy and Resideo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resideo Technologies 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 Resideo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resideo Technologies has no effect on the direction of Simplify Macro i.e., Simplify Macro and Resideo Technologies go up and down completely randomly.

Pair Corralation between Simplify Macro and Resideo Technologies

Considering the 90-day investment horizon Simplify Macro Strategy is expected to generate 0.42 times more return on investment than Resideo Technologies. However, Simplify Macro Strategy is 2.35 times less risky than Resideo Technologies. It trades about 0.06 of its potential returns per unit of risk. Resideo Technologies is currently generating about -0.09 per unit of risk. If you would invest  2,148  in Simplify Macro Strategy on February 3, 2025 and sell it today you would earn a total of  114.00  from holding Simplify Macro Strategy or generate 5.31% 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.  Resideo Technologies

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 stable forward indicators, Simplify Macro is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Resideo Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resideo Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Simplify Macro and Resideo Technologies

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

The idea behind Simplify Macro Strategy and Resideo Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.