Correlation Between Listed Funds and SmartETFs Asia

Can any of the company-specific risk be diversified away by investing in both Listed Funds and SmartETFs Asia 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 SmartETFs Asia 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 SmartETFs Asia Pacific, you can compare the effects of market volatilities on Listed Funds and SmartETFs Asia 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 SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Listed Funds and SmartETFs Asia.

Diversification Opportunities for Listed Funds and SmartETFs Asia

0.04

Correlation Coefficient

Listed Funds  SmartETFs Asia

Significant diversification

The 3 months correlation between Listed and SmartETFs is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific 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 SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of Listed Funds i.e., Listed Funds and SmartETFs Asia go up and down completely randomly.

Pair Corralation between Listed Funds and SmartETFs Asia

Given the investment horizon of 90 days Listed Funds is expected to generate 1.84 times less return on investment than SmartETFs Asia. But when comparing it to its historical volatility, Listed Funds Trust is 2.65 times less risky than SmartETFs Asia. It trades about 0.1 of its potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,496  in SmartETFs Asia Pacific on September 12, 2024 and sell it today you would earn a total of  84.00  from holding SmartETFs Asia Pacific or generate 5.61% return on investment over 90 days.

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

Listed Funds Trust  vs.  SmartETFs Asia Pacific

Listed Funds Trust

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Listed Funds Trust are ranked lower than 7 (%) 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.

SmartETFs Asia Pacific

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Asia Pacific are ranked lower than 5 (%) 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.

Pair Trading with Listed Funds and SmartETFs Asia

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

The idea behind Listed Funds Trust and SmartETFs Asia Pacific 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.