Correlation Between Simplify Equity and Alpha Architect

Can any of the company-specific risk be diversified away by investing in both Simplify Equity and Alpha Architect 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 Alpha Architect 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 Alpha Architect ETF, you can compare the effects of market volatilities on Simplify Equity and Alpha Architect 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 Alpha Architect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Equity and Alpha Architect.

Diversification Opportunities for Simplify Equity and Alpha Architect

0.92

Correlation Coefficient

Simplify Equity  Alpha Architect

Almost no diversification

The 3 months correlation between Simplify and Alpha is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Equity PLUS and Alpha Architect ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Architect ETF 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 Alpha Architect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Architect ETF has no effect on the direction of Simplify Equity i.e., Simplify Equity and Alpha Architect go up and down completely randomly.

Pair Corralation between Simplify Equity and Alpha Architect

Given the investment horizon of 90 days Simplify Equity PLUS is expected to generate 1.41 times more return on investment than Alpha Architect. However, Simplify Equity is 1.41 times more volatile than Alpha Architect ETF. It trades about 0.12 of its potential returns per unit of risk. Alpha Architect ETF is currently generating about 0.16 per unit of risk. If you would invest  3,722  in Simplify Equity PLUS on May 9, 2025 and sell it today you would earn a total of  353.00  from holding Simplify Equity PLUS or generate 9.48% 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.  Alpha Architect ETF

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

Alpha Architect ETF

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Architect ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Alpha Architect may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Simplify Equity and Alpha Architect

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

The idea behind Simplify Equity PLUS and Alpha Architect ETF 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.