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 Stock 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

Vanguard Total  Listed Funds

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 Stock 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 Stock 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

Considering the 90-day investment horizon Vanguard Total Stock is expected to generate 0.54 times more return on investment than Listed Funds. However, Vanguard Total Stock is 1.85 times less risky than Listed Funds. It trades about -0.08 of its potential returns per unit of risk. Listed Funds Trust is currently generating about -0.3 per unit of risk. If you would invest  29,956  in Vanguard Total Stock on October 8, 2024 and sell it today you would lose (486.00) from holding Vanguard Total Stock or give up 1.62% of portfolio value over 90 days.

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

Vanguard Total Stock  vs.  Listed Funds Trust

Vanguard Total Stock

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 uncertain performance in the last few months, the Etf's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

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.

The idea behind Vanguard Total Stock and Listed Funds Trust 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.