Correlation Between SPDR Portfolio and Simplify Volatility

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Can any of the company-specific risk be diversified away by investing in both SPDR Portfolio and Simplify Volatility 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 SPDR Portfolio and Simplify Volatility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Portfolio SP and Simplify Volatility Premium, you can compare the effects of market volatilities on SPDR Portfolio and Simplify Volatility 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 SPDR Portfolio with a short position of Simplify Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Portfolio and Simplify Volatility.

Diversification Opportunities for SPDR Portfolio and Simplify Volatility

0.39
  Correlation Coefficient

Weak diversification

The 3 months correlation between SPDR and Simplify is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Portfolio SP and Simplify Volatility Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volatility and SPDR Portfolio 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 SPDR Portfolio SP are associated (or correlated) with Simplify Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volatility has no effect on the direction of SPDR Portfolio i.e., SPDR Portfolio and Simplify Volatility go up and down completely randomly.

Pair Corralation between SPDR Portfolio and Simplify Volatility

Given the investment horizon of 90 days SPDR Portfolio SP is expected to generate 0.56 times more return on investment than Simplify Volatility. However, SPDR Portfolio SP is 1.79 times less risky than Simplify Volatility. It trades about 0.08 of its potential returns per unit of risk. Simplify Volatility Premium is currently generating about 0.02 per unit of risk. If you would invest  5,100  in SPDR Portfolio SP on April 30, 2025 and sell it today you would earn a total of  2,398  from holding SPDR Portfolio SP or generate 47.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SPDR Portfolio SP  vs.  Simplify Volatility Premium

 Performance 
       Timeline  
SPDR Portfolio SP 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio SP are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, SPDR Portfolio reported solid returns over the last few months and may actually be approaching a breakup point.
Simplify Volatility 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volatility Premium are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Simplify Volatility may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SPDR Portfolio and Simplify Volatility Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPDR Portfolio and Simplify Volatility

The main advantage of trading using opposite SPDR Portfolio and Simplify Volatility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Portfolio position performs unexpectedly, Simplify Volatility 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 Volatility will offset losses from the drop in Simplify Volatility's long position.
The idea behind SPDR Portfolio SP and Simplify Volatility Premium 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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