Correlation Between Listed Funds and Vanguard Industrials
Can any of the company-specific risk be diversified away by investing in both Listed Funds and Vanguard Industrials 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 Listed Funds and Vanguard Industrials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Listed Funds Trust and Vanguard Industrials Index, you can compare the effects of market volatilities on Listed Funds and Vanguard Industrials 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 Listed Funds with a short position of Vanguard Industrials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Listed Funds and Vanguard Industrials.
Diversification Opportunities for Listed Funds and Vanguard Industrials
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Listed and Vanguard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Vanguard Industrials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Industrials and Listed Funds 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 Listed Funds Trust are associated (or correlated) with Vanguard Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Industrials has no effect on the direction of Listed Funds i.e., Listed Funds and Vanguard Industrials go up and down completely randomly.
Pair Corralation between Listed Funds and Vanguard Industrials
Given the investment horizon of 90 days Listed Funds is expected to generate 4.92 times less return on investment than Vanguard Industrials. But when comparing it to its historical volatility, Listed Funds Trust is 2.43 times less risky than Vanguard Industrials. It trades about 0.05 of its potential returns per unit of risk. Vanguard Industrials Index is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 19,597 in Vanguard Industrials Index on September 12, 2024 and sell it today you would earn a total of 7,370 from holding Vanguard Industrials Index or generate 37.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Listed Funds Trust vs. Vanguard Industrials Index
Performance |
| Timeline |
| Listed Funds Trust |
| Vanguard Industrials |
Listed Funds and Vanguard Industrials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Listed Funds and Vanguard Industrials
The main advantage of trading using opposite Listed Funds and Vanguard Industrials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Listed Funds position performs unexpectedly, Vanguard Industrials 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 Vanguard Industrials will offset losses from the drop in Vanguard Industrials' long position.| Listed Funds vs. Invesco SP 500 | Listed Funds vs. Invesco SP 500 | Listed Funds vs. Invesco SP 500 | Listed Funds vs. Aquagold International |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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