Correlation Between FT Cboe and Leuthold Core

Can any of the company-specific risk be diversified away by investing in both FT Cboe and Leuthold Core 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 FT Cboe and Leuthold Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FT Cboe Vest and Leuthold Core ETF, you can compare the effects of market volatilities on FT Cboe and Leuthold Core 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 FT Cboe with a short position of Leuthold Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Leuthold Core.

Diversification Opportunities for FT Cboe and Leuthold Core

0.87

Correlation Coefficient

FT Cboe  Leuthold Core

Very poor diversification

The 3 months correlation between DNOV and Leuthold is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Leuthold Core ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leuthold Core ETF and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Leuthold Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leuthold Core ETF has no effect on the direction of FT Cboe i.e., FT Cboe and Leuthold Core go up and down completely randomly.

Pair Corralation between FT Cboe and Leuthold Core

Given the investment horizon of 90 days FT Cboe is expected to generate 1.26 times less return on investment than Leuthold Core. But when comparing it to its historical volatility, FT Cboe Vest is 3.22 times less risky than Leuthold Core. It trades about 0.42 of its potential returns per unit of risk. Leuthold Core ETF is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,462  in Leuthold Core ETF on September 4, 2024 and sell it today you would earn a total of  157.00  from holding Leuthold Core ETF or generate 4.53% return on investment over 90 days.

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

FT Cboe Vest  vs.  Leuthold Core ETF

FT Cboe Vest

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, FT Cboe is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Leuthold Core ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leuthold Core ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Leuthold Core is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FT Cboe and Leuthold Core

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

The idea behind FT Cboe Vest and Leuthold Core ETF 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.