Correlation Between IShares Trust and Simplify Equity

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

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

Diversification Opportunities for IShares Trust and Simplify Equity

0.59

Correlation Coefficient

IShares Trust  Simplify Equity

Very weak diversification

The 3 months correlation between IShares and Simplify is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust 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 IShares Trust 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 iShares Trust 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 IShares Trust i.e., IShares Trust and Simplify Equity go up and down completely randomly.

Pair Corralation between IShares Trust and Simplify Equity

Given the investment horizon of 90 days IShares Trust is expected to generate 1.16 times less return on investment than Simplify Equity. But when comparing it to its historical volatility, iShares Trust is 2.11 times less risky than Simplify Equity. It trades about 0.28 of its potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,458  in Simplify Equity PLUS on April 30, 2025 and sell it today you would earn a total of  365.00  from holding Simplify Equity PLUS or generate 10.56% return on investment over 90 days.

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

iShares Trust  vs.  Simplify Equity PLUS

iShares Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Trust are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, IShares Trust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Simplify Equity may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with IShares Trust and Simplify Equity

The main advantage of trading using opposite IShares Trust and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust 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 iShares Trust 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.