Correlation Between Litman Gregory and FT Vest
Can any of the company-specific risk be diversified away by investing in both Litman Gregory and FT Vest 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 Litman Gregory and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litman Gregory Funds and FT Vest Equity, you can compare the effects of market volatilities on Litman Gregory and FT Vest 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 Litman Gregory with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and FT Vest.
Diversification Opportunities for Litman Gregory and FT Vest
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Litman and DHDG is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Funds and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity and Litman Gregory 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 Litman Gregory Funds are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Litman Gregory i.e., Litman Gregory and FT Vest go up and down completely randomly.
Pair Corralation between Litman Gregory and FT Vest
Given the investment horizon of 90 days Litman Gregory Funds is expected to generate 2.12 times more return on investment than FT Vest. However, Litman Gregory is 2.12 times more volatile than FT Vest Equity. It trades about 0.12 of its potential returns per unit of risk. FT Vest Equity is currently generating about 0.18 per unit of risk. If you would invest 1,065 in Litman Gregory Funds on September 1, 2024 and sell it today you would earn a total of 142.00 from holding Litman Gregory Funds or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.83% |
| Values | Daily Returns |
Litman Gregory Funds vs. FT Vest Equity
Performance |
| Timeline |
| Litman Gregory Funds |
| FT Vest Equity |
Litman Gregory and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litman Gregory and FT Vest
The main advantage of trading using opposite Litman Gregory and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litman Gregory position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| Litman Gregory vs. FT Vest Equity | Litman Gregory vs. Northern Lights | Litman Gregory vs. Dimensional International High | Litman Gregory vs. Matthews China Discovery |
| FT Vest vs. Vanguard Total Stock | FT Vest vs. SPDR SP 500 | FT Vest vs. iShares Core SP | FT Vest vs. Vanguard Total Bond |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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