Correlation Between Vanguard Total and Listed Funds
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Listed Funds 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 Vanguard Total and Listed Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total World and Listed Funds Trust, you can compare the effects of market volatilities on Vanguard Total and Listed Funds 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 Vanguard Total with a short position of Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Listed Funds.
Diversification Opportunities for Vanguard Total and Listed Funds
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Listed is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total World and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust and Vanguard Total 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 Vanguard Total World are associated (or correlated) with Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of Vanguard Total i.e., Vanguard Total and Listed Funds go up and down completely randomly.
Pair Corralation between Vanguard Total and Listed Funds
Allowing for the 90-day total investment horizon Vanguard Total World is expected to generate 1.14 times more return on investment than Listed Funds. However, Vanguard Total is 1.14 times more volatile than Listed Funds Trust. It trades about 0.09 of its potential returns per unit of risk. Listed Funds Trust is currently generating about 0.05 per unit of risk. If you would invest 8,731 in Vanguard Total World on October 8, 2024 and sell it today you would earn a total of 3,187 from holding Vanguard Total World or generate 36.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vanguard Total World vs. Listed Funds Trust
Performance |
Timeline |
Vanguard Total World |
Listed Funds Trust |
Vanguard Total and Listed Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vanguard Total and Listed Funds
The main advantage of trading using opposite Vanguard Total and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Listed Funds 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 Listed Funds will offset losses from the drop in Listed Funds' long position.Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Total Bond | Vanguard Total vs. Vanguard FTSE Emerging |
Listed Funds vs. Pacer Global Cash | Listed Funds vs. SmartETFs Dividend Builder | Listed Funds vs. FT Cboe Vest | Listed Funds vs. Franklin International Low |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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