Correlation Between SSGA Active and Simplify Managed

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

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

Diversification Opportunities for SSGA Active and Simplify Managed

-0.11

Correlation Coefficient

SSGA Active  Simplify Managed

Good diversification

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

Pair Corralation between SSGA Active and Simplify Managed

Given the investment horizon of 90 days SSGA Active is expected to generate 1.01 times less return on investment than Simplify Managed. But when comparing it to its historical volatility, SSGA Active Trust is 3.58 times less risky than Simplify Managed. It trades about 0.21 of its potential returns per unit of risk. Simplify Managed Futures is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,701  in Simplify Managed Futures on May 25, 2025 and sell it today you would earn a total of  89.00  from holding Simplify Managed Futures or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

SSGA Active Trust  vs.  Simplify Managed Futures

SSGA Active Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SSGA Active Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, SSGA Active is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Simplify Managed Futures

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Managed Futures are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Simplify Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SSGA Active and Simplify Managed

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

The idea behind SSGA Active Trust and Simplify Managed Futures 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.