Correlation Between Listed Funds and VanEck Morningstar

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

Diversification Opportunities for Listed Funds and VanEck Morningstar

0.35

Correlation Coefficient

Listed Funds  VanEck Morningstar

Weak diversification

The 3 months correlation between Listed and VanEck is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and VanEck Morningstar Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar Wide 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 VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar Wide has no effect on the direction of Listed Funds i.e., Listed Funds and VanEck Morningstar go up and down completely randomly.

Pair Corralation between Listed Funds and VanEck Morningstar

Given the investment horizon of 90 days Listed Funds Trust is expected to generate 0.76 times more return on investment than VanEck Morningstar. However, Listed Funds Trust is 1.31 times less risky than VanEck Morningstar. It trades about -0.2 of its potential returns per unit of risk. VanEck Morningstar Wide is currently generating about -0.26 per unit of risk. If you would invest  3,308  in Listed Funds Trust on October 11, 2024 and sell it today you would lose (96.00) from holding Listed Funds Trust or give up 2.9% of portfolio value over 90 days.

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

Listed Funds Trust  vs.  VanEck Morningstar Wide

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.

VanEck Morningstar Wide

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VanEck Morningstar Wide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VanEck Morningstar is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Listed Funds and VanEck Morningstar

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

The idea behind Listed Funds Trust and VanEck Morningstar Wide 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.