Correlation Between SPDR SP and Simplify Propel

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

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

Diversification Opportunities for SPDR SP and Simplify Propel

0.73

Correlation Coefficient

SPDR SP  Simplify Propel

Poor diversification

The 3 months correlation between SPDR and Simplify is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Biotech and Simplify Propel Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Propel Oppo and SPDR SP 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 SPDR SP Biotech are associated (or correlated) with Simplify Propel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Propel Oppo has no effect on the direction of SPDR SP i.e., SPDR SP and Simplify Propel go up and down completely randomly.

Pair Corralation between SPDR SP and Simplify Propel

Considering the 90-day investment horizon SPDR SP Biotech is expected to generate 0.78 times more return on investment than Simplify Propel. However, SPDR SP Biotech is 1.28 times less risky than Simplify Propel. It trades about 0.31 of its potential returns per unit of risk. Simplify Propel Opportunities is currently generating about 0.16 per unit of risk. If you would invest  9,340  in SPDR SP Biotech on September 14, 2025 and sell it today you would earn a total of  2,973  from holding SPDR SP Biotech or generate 31.83% return on investment over 90 days.

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

SPDR SP Biotech  vs.  Simplify Propel Opportunities

SPDR SP Biotech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Biotech are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental drivers, SPDR SP demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Simplify Propel Oppo

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simplify Propel Opportunities are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Simplify Propel demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPDR SP and Simplify Propel

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

The idea behind SPDR SP Biotech and Simplify Propel Opportunities 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.