Correlation Between Simplify Exchange and Simplify Managed

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

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

Diversification Opportunities for Simplify Exchange and Simplify Managed

-0.09

Correlation Coefficient

Simplify Exchange  Simplify Managed

Good diversification

The 3 months correlation between Simplify and Simplify is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Simplify Exchange Traded 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 Simplify Exchange 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 Exchange Traded 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 Simplify Exchange i.e., Simplify Exchange and Simplify Managed go up and down completely randomly.

Pair Corralation between Simplify Exchange and Simplify Managed

Considering the 90-day investment horizon Simplify Exchange Traded is expected to under-perform the Simplify Managed. In addition to that, Simplify Exchange is 1.34 times more volatile than Simplify Managed Futures. It trades about -0.02 of its total potential returns per unit of risk. Simplify Managed Futures is currently generating about 0.01 per unit of volatility. If you would invest  2,799  in Simplify Managed Futures on April 28, 2025 and sell it today you would earn a total of  9.00  from holding Simplify Managed Futures or generate 0.32% return on investment over 90 days.

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

Simplify Exchange Traded  vs.  Simplify Managed Futures

Simplify Exchange Traded

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Exchange Traded has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Exchange is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Simplify Managed Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simplify Managed Futures has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Simplify Managed is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Simplify Exchange and Simplify Managed

The main advantage of trading using opposite Simplify Exchange and Simplify Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simplify Exchange 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 Simplify Exchange Traded 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.