Correlation Between Listed Funds and Ned Davis

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

Diversification Opportunities for Listed Funds and Ned Davis

0.36

Correlation Coefficient

Listed Funds  Ned Davis

Weak diversification

The 3 months correlation between Listed and Ned is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Ned Davis Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ned Davis Research 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 Ned Davis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ned Davis Research has no effect on the direction of Listed Funds i.e., Listed Funds and Ned Davis go up and down completely randomly.

Pair Corralation between Listed Funds and Ned Davis

Given the investment horizon of 90 days Listed Funds Trust is expected to generate 1.1 times more return on investment than Ned Davis. However, Listed Funds is 1.1 times more volatile than Ned Davis Research. It trades about 0.16 of its potential returns per unit of risk. Ned Davis Research is currently generating about 0.01 per unit of risk. If you would invest  3,147  in Listed Funds Trust on December 19, 2024 and sell it today you would earn a total of  219.00  from holding Listed Funds Trust or generate 6.96% return on investment over 90 days.

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

Listed Funds Trust  vs.  Ned Davis Research

Listed Funds Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Listed Funds Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Listed Funds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ned Davis Research

Risk-Adjusted Performance

Weak

Over the last 90 days Ned Davis Research has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ned Davis is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Listed Funds and Ned Davis

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

The idea behind Listed Funds Trust and Ned Davis Research 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.