Fund Correlation Calculator/Optimizer?

[BOBOT]

Don't know if there is such a thing or where to find it.


Our holdings, mostly VG funds & ETFs, are in multiple deferred accounts and a couple taxable, and over the years we (I) have "diversified" into a lot of different holdings. I suspect there is a fair amount of overlap, and would like to simplify our portfolio to a manageable few, with an eye to asset location considerations.


Any ideas?

 

[pb4uski]

Perhaps Morningstar X-Ray tool to start?

 

[audreyh1]

Morningstar makes it easy to compare funds.

Generally if you move to index funds or ETFs it’s easy to consolidate down to just a few funds.

The X-ray tool is very comprehensive. I think it still requires a paid membership to use. A lot of the other Morningstar fund tools you may use with just being registered.

 

[SnowballCamper]

Here is a calculator that outputs the correlation matrix for a list of ticker symbols. https://www.portfoliovisualizer.com/asset-correlations

I'm not sure how one would optimize... Although this would surely be useful to reduce the number of holdings to the few with the lowest correlation among them.

 

[marko]

Perhaps Morningstar X-Ray tool to start?

+1. "Stock Intersection" tab.

 

[Exchme]

Portfoliovisualizer.com will do this and much more. Look under Asset Correlations.

 

[BOBOT]

Thanks, I remember seeing M* x-ray when it was included in Quicken, but never tried it. And PV looks interesting too.


Found this site with tools for ETF's:


https://www.etfrc.com/index.php

 

[BOBOT]

Help me interpret this?

Here's a screen shot from Port. Visualizer. It seems to show a perfect (1.0) correlation between VOO and VTI, but VOO is a subset of VTI.


What do I not understand??

 

[BOBOT]

Sorry, that didn't paste in for some reason.

 

[MarieIG]

I am not getting the screen shot - but you can go into each fund over at Vanguard and see the profile.
IIRC the VOO is the S&P and VTI the total US stock market. The S&P "outweighs" the smaller companies therefore comprises much more of the market (by weight) than the smaller stocks, and therefore the performance in the VOO and VTI may be somewhat similar.

(Edit - removed cut and paste as too confusing.)

 

[OldShooter]

... Generally if you move to index funds or ETFs it’s easy to consolidate down to just a few funds. ...

This.

Two or three years ago we went through the exercise you are planning and from then going forward 95% of our equity tranche is in one fund, VTWAX. That's a world fund, holding the world on a market cap basis. Many people here would consider that to involve too much foreign equity, so if you are in that camp you might end up with two funds, one US total market and one International, in proportions to your taste.

Coincidentally, I just finished re-reading the latest edition of Charles Ellis' "Winning the Loser's Game." It's outstanding. I'd encourage you to read that one before you begin your exercise.