Correlation Between Managed Account and Exchange Traded

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

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

Diversification Opportunities for Managed Account and Exchange Traded

0.18

Correlation Coefficient

Managed Account  Exchange Traded

Average diversification

The 3 months correlation between Managed and Exchange is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Managed Account Series and Exchange Traded Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Traded Concepts and Managed Account 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 Managed Account Series are associated (or correlated) with Exchange Traded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Traded Concepts has no effect on the direction of Managed Account i.e., Managed Account and Exchange Traded go up and down completely randomly.

Pair Corralation between Managed Account and Exchange Traded

If you would invest  895.00  in Managed Account Series on September 5, 2024 and sell it today you would earn a total of  5.00  from holding Managed Account Series or generate 0.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Managed Account Series  vs.  Exchange Traded Concepts

Managed Account Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Managed Account Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Managed Account is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Solid

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 conflicting basic indicators, Exchange Traded exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Managed Account and Exchange Traded

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

The idea behind Managed Account Series and Exchange Traded Concepts 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.