Correlation Between SmartETFs Asia and Listed Funds

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

By analyzing existing cross correlation between SmartETFs Asia Pacific and Listed Funds Trust, you can compare the effects of market volatilities on SmartETFs Asia and Listed Funds 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 SmartETFs Asia with a short position of Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of SmartETFs Asia and Listed Funds.

Diversification Opportunities for SmartETFs Asia and Listed Funds

0.86

Correlation Coefficient

SmartETFs Asia  Listed Funds

Very poor diversification

The 3 months correlation between SmartETFs and Listed is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SmartETFs Asia Pacific and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust and SmartETFs Asia 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 SmartETFs Asia Pacific are associated (or correlated) with Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of SmartETFs Asia i.e., SmartETFs Asia and Listed Funds go up and down completely randomly.

Pair Corralation between SmartETFs Asia and Listed Funds

Given the investment horizon of 90 days SmartETFs Asia is expected to generate 5.28 times less return on investment than Listed Funds. In addition to that, SmartETFs Asia is 1.3 times more volatile than Listed Funds Trust. It trades about 0.02 of its total potential returns per unit of risk. Listed Funds Trust is currently generating about 0.13 per unit of volatility. If you would invest  3,180  in Listed Funds Trust on December 29, 2024 and sell it today you would earn a total of  187.00  from holding Listed Funds Trust or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

SmartETFs Asia Pacific  vs.  Listed Funds Trust

SmartETFs Asia Pacific

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Asia Pacific are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, SmartETFs Asia is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Listed Funds Trust

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Listed Funds Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Listed Funds is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SmartETFs Asia and Listed Funds

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

The idea behind SmartETFs Asia Pacific and Listed Funds Trust 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.