Correlation Between Listed Funds and Volatility Shares

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

Diversification Opportunities for Listed Funds and Volatility Shares

0.78

Correlation Coefficient

Listed Funds  Volatility Shares

Poor diversification

The 3 months correlation between Listed and Volatility is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Listed Funds Trust and Volatility Shares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volatility Shares Trust 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 Volatility Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volatility Shares Trust has no effect on the direction of Listed Funds i.e., Listed Funds and Volatility Shares go up and down completely randomly.

Pair Corralation between Listed Funds and Volatility Shares

Given the investment horizon of 90 days Listed Funds Trust is expected to generate 0.81 times more return on investment than Volatility Shares. However, Listed Funds Trust is 1.24 times less risky than Volatility Shares. It trades about 0.02 of its potential returns per unit of risk. Volatility Shares Trust is currently generating about 0.01 per unit of risk. If you would invest  2,329  in Listed Funds Trust on December 22, 2024 and sell it today you would earn a total of  10.00  from holding Listed Funds Trust or generate 0.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Listed Funds Trust  vs.  Volatility Shares Trust

Listed Funds Trust

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Listed Funds Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Listed Funds is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Volatility Shares Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Volatility Shares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Volatility Shares is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Listed Funds and Volatility Shares

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

The idea behind Listed Funds Trust and Volatility Shares 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..