Correlation Between International Business and Simplify Equity

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

By analyzing existing cross correlation between International Business Machines and Simplify Equity PLUS, you can compare the effects of market volatilities on International Business and Simplify Equity 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 International Business with a short position of Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Simplify Equity.

Diversification Opportunities for International Business and Simplify Equity

0.76

Correlation Coefficient

International Business  Simplify Equity

Poor diversification

The 3 months correlation between International and Simplify is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS and International Business 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 International Business Machines are associated (or correlated) with Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of International Business i.e., International Business and Simplify Equity go up and down completely randomly.

Pair Corralation between International Business and Simplify Equity

Considering the 90-day investment horizon International Business Machines is expected to generate 2.09 times more return on investment than Simplify Equity. However, International Business is 2.09 times more volatile than Simplify Equity PLUS. It trades about 0.19 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.15 per unit of risk. If you would invest  25,145  in International Business Machines on July 31, 2025 and sell it today you would earn a total of  5,676  from holding International Business Machines or generate 22.57% return on investment over 90 days.

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

International Business Machine  vs.  Simplify Equity PLUS

International Business

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, International Business displayed solid returns over the last few months and may actually be approaching a breakup point.

Simplify Equity PLUS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental drivers, Simplify Equity may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with International Business and Simplify Equity

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

The idea behind International Business Machines and Simplify Equity PLUS 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.