Correlation Between Vanguard Small and Simplify Exchange

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

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

Diversification Opportunities for Vanguard Small and Simplify Exchange

0.92

Correlation Coefficient

Vanguard Small  Simplify Exchange

Almost no diversification

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

Pair Corralation between Vanguard Small and Simplify Exchange

Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to generate 1.29 times more return on investment than Simplify Exchange. However, Vanguard Small is 1.29 times more volatile than Simplify Exchange Traded. It trades about 0.16 of its potential returns per unit of risk. Simplify Exchange Traded is currently generating about 0.17 per unit of risk. If you would invest  22,608  in Vanguard Small Cap Index on May 21, 2025 and sell it today you would earn a total of  2,048  from holding Vanguard Small Cap Index or generate 9.06% return on investment over 90 days.

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

Vanguard Small Cap Index  vs.  Simplify Exchange Traded

Vanguard Small Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Small Cap Index are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental drivers, Vanguard Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Simplify Exchange Traded

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Exchange Traded are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Simplify Exchange may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Vanguard Small and Simplify Exchange

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

The idea behind Vanguard Small Cap Index and Simplify Exchange Traded 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.