Correlation Between Simplify Volatility and ETRACS Monthly

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

By analyzing existing cross correlation between Simplify Volatility Premium and ETRACS Monthly Pay, you can compare the effects of market volatilities on Simplify Volatility and ETRACS Monthly 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 Volatility with a short position of ETRACS Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simplify Volatility and ETRACS Monthly.

Diversification Opportunities for Simplify Volatility and ETRACS Monthly

0.55

Correlation Coefficient

Simplify Volatility  ETRACS Monthly

Very weak diversification

The 3 months correlation between Simplify and ETRACS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Volatility Premium and ETRACS Monthly Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS Monthly Pay and Simplify Volatility 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 Volatility Premium are associated (or correlated) with ETRACS Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS Monthly Pay has no effect on the direction of Simplify Volatility i.e., Simplify Volatility and ETRACS Monthly go up and down completely randomly.

Pair Corralation between Simplify Volatility and ETRACS Monthly

Given the investment horizon of 90 days Simplify Volatility Premium is expected to generate 1.83 times more return on investment than ETRACS Monthly. However, Simplify Volatility is 1.83 times more volatile than ETRACS Monthly Pay. It trades about 0.06 of its potential returns per unit of risk. ETRACS Monthly Pay is currently generating about 0.11 per unit of risk. If you would invest  1,575  in Simplify Volatility Premium on April 30, 2025 and sell it today you would earn a total of  141.00  from holding Simplify Volatility Premium or generate 8.95% return on investment over 90 days.

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

Simplify Volatility Premium  vs.  ETRACS Monthly Pay

Simplify Volatility

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Volatility Premium are ranked lower than 4 (%) 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.

ETRACS Monthly Pay

Risk-Adjusted Performance

OK

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

Pair Trading with Simplify Volatility and ETRACS Monthly

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

The idea behind Simplify Volatility Premium and ETRACS Monthly Pay 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.