Correlation Between Simplify Macro and Short Real

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

Diversification Opportunities for Simplify Macro and Short Real

-0.33

Correlation Coefficient

Simplify Macro  Short Real

Very good diversification

The 3 months correlation between Simplify and Short is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Macro Strategy and Short Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Real Estate 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 Short Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Real Estate has no effect on the direction of Simplify Macro i.e., Simplify Macro and Short Real go up and down completely randomly.

Pair Corralation between Simplify Macro and Short Real

Considering the 90-day investment horizon Simplify Macro Strategy is expected to generate 1.03 times more return on investment than Short Real. However, Simplify Macro is 1.03 times more volatile than Short Real Estate. It trades about 0.13 of its potential returns per unit of risk. Short Real Estate is currently generating about 0.04 per unit of risk. If you would invest  2,128  in Simplify Macro Strategy on January 30, 2025 and sell it today you would earn a total of  124.00  from holding Simplify Macro Strategy or generate 5.83% return on investment over 90 days.

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

Simplify Macro Strategy  vs.  Short Real Estate

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.

Short Real Estate

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Short Real Estate are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Short Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simplify Macro and Short Real

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

The idea behind Simplify Macro Strategy and Short Real Estate 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.