Correlation Between Formidable ETF and Simplify Macro

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

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

Diversification Opportunities for Formidable ETF and Simplify Macro

-0.4

Correlation Coefficient

Formidable ETF  Simplify Macro

Very good diversification

The 3 months correlation between Formidable and Simplify is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Formidable ETF and Simplify Macro Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Macro Strategy and Formidable ETF 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 Formidable ETF are associated (or correlated) with Simplify Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Macro Strategy has no effect on the direction of Formidable ETF i.e., Formidable ETF and Simplify Macro go up and down completely randomly.

Pair Corralation between Formidable ETF and Simplify Macro

Given the investment horizon of 90 days Formidable ETF is expected to under-perform the Simplify Macro. But the etf apears to be less risky and, when comparing its historical volatility, Formidable ETF is 1.02 times less risky than Simplify Macro. The etf trades about 0.0 of its potential returns per unit of risk. The Simplify Macro Strategy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,141  in Simplify Macro Strategy on August 25, 2024 and sell it today you would earn a total of  105.00  from holding Simplify Macro Strategy or generate 4.9% return on investment over 90 days.

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

Formidable ETF  vs.  Simplify Macro Strategy

Formidable ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Formidable ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Formidable ETF is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Simplify Macro Strategy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Macro Strategy are ranked lower than 7 (%) 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.

Pair Trading with Formidable ETF and Simplify Macro

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

The idea behind Formidable ETF and Simplify Macro Strategy 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 Transaction History module to view history of all your transactions and understand their impact on performance.