Correlation Between Exchange Traded and Managed Portfolio

Can any of the company-specific risk be diversified away by investing in both Exchange Traded and Managed Portfolio 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 Exchange Traded and Managed Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exchange Traded Concepts and Managed Portfolio Series, you can compare the effects of market volatilities on Exchange Traded and Managed Portfolio 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 Exchange Traded with a short position of Managed Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and Managed Portfolio.

Diversification Opportunities for Exchange Traded and Managed Portfolio

0.0

Correlation Coefficient

Exchange Traded  Managed Portfolio

Pay attention - limited upside

The 3 months correlation between Exchange and Managed is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and Managed Portfolio Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Managed Portfolio Series and Exchange Traded 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 Exchange Traded Concepts are associated (or correlated) with Managed Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Managed Portfolio Series has no effect on the direction of Exchange Traded i.e., Exchange Traded and Managed Portfolio go up and down completely randomly.

Pair Corralation between Exchange Traded and Managed Portfolio

If you would invest (100.00) in Exchange Traded Concepts on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Exchange Traded Concepts or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Exchange Traded Concepts  vs.  Managed Portfolio Series

Exchange Traded Concepts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Exchange Traded is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Managed Portfolio Series

Risk-Adjusted Performance

Very Weak

Over the last 90 days Managed Portfolio Series has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Managed Portfolio is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Exchange Traded and Managed Portfolio

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

The idea behind Exchange Traded Concepts and Managed Portfolio Series 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.

Check out your portfolio center.

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.