Correlation Between Listed Funds and FT Vest

Can any of the company-specific risk be diversified away by investing in both Listed Funds 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 Listed Funds and FT Vest 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 FT Vest Dow, you can compare the effects of market volatilities on Listed Funds 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 Listed Funds with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Listed Funds and FT Vest.

Diversification Opportunities for Listed Funds and FT Vest

0.06

Correlation Coefficient

Listed Funds  FT Vest

Significant diversification

The 3 months correlation between Listed and FDND is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and FT Vest Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Dow 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 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 Dow has no effect on the direction of Listed Funds i.e., Listed Funds and FT Vest go up and down completely randomly.

Pair Corralation between Listed Funds and FT Vest

Given the investment horizon of 90 days Listed Funds Trust is expected to under-perform the FT Vest. But the etf apears to be less risky and, when comparing its historical volatility, Listed Funds Trust is 1.77 times less risky than FT Vest. The etf trades about -0.27 of its potential returns per unit of risk. The FT Vest Dow is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  2,305  in FT Vest Dow on October 10, 2024 and sell it today you would lose (54.00) from holding FT Vest Dow or give up 2.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Listed Funds Trust  vs.  FT Vest Dow

Listed Funds Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Listed Funds Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

FT Vest Dow

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest Dow are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, FT Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Listed Funds and FT Vest

The main advantage of trading using opposite Listed Funds and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Listed Funds 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.

The idea behind Listed Funds Trust and FT Vest Dow 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.