Correlation Between Simplify Equity and SPDR SP

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

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

Diversification Opportunities for Simplify Equity and SPDR SP

0.9

Correlation Coefficient

Simplify Equity  SPDR SP

Almost no diversification

The 3 months correlation between Simplify and SPDR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and SPDR SP Kensho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Kensho and Simplify Equity 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 Simplify Equity PLUS are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Kensho has no effect on the direction of Simplify Equity i.e., Simplify Equity and SPDR SP go up and down completely randomly.

Pair Corralation between Simplify Equity and SPDR SP

Given the investment horizon of 90 days Simplify Equity is expected to generate 2.31 times less return on investment than SPDR SP. But when comparing it to its historical volatility, Simplify Equity PLUS is 1.27 times less risky than SPDR SP. It trades about 0.06 of its potential returns per unit of risk. SPDR SP Kensho is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,843  in SPDR SP Kensho on May 10, 2025 and sell it today you would earn a total of  265.00  from holding SPDR SP Kensho or generate 9.32% return on investment over 90 days.

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

Simplify Equity PLUS  vs.  SPDR SP Kensho

Simplify Equity PLUS

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Equity PLUS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Simplify Equity is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

SPDR SP Kensho

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Kensho are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Simplify Equity and SPDR SP

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

The idea behind Simplify Equity PLUS and SPDR SP Kensho 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.