Correlation Between Listed Funds and Vanguard Industrials

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

Diversification Opportunities for Listed Funds and Vanguard Industrials

0.11

Correlation Coefficient

Listed Funds  Vanguard Industrials

Average diversification

The 3 months correlation between Listed and Vanguard is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Vanguard Industrials Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Industrials 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 Vanguard Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Industrials has no effect on the direction of Listed Funds i.e., Listed Funds and Vanguard Industrials go up and down completely randomly.

Pair Corralation between Listed Funds and Vanguard Industrials

Given the investment horizon of 90 days Listed Funds Trust is expected to generate 0.16 times more return on investment than Vanguard Industrials. However, Listed Funds Trust is 6.15 times less risky than Vanguard Industrials. It trades about 0.12 of its potential returns per unit of risk. Vanguard Industrials Index is currently generating about -0.04 per unit of risk. If you would invest  2,572  in Listed Funds Trust on October 6, 2024 and sell it today you would earn a total of  22.00  from holding Listed Funds Trust or generate 0.86% 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.  Vanguard Industrials Index

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 fundamental indicators, Listed Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Industrials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Industrials Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Vanguard Industrials is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Listed Funds and Vanguard Industrials

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

The idea behind Listed Funds Trust and Vanguard Industrials Index 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.