Correlation Between ETF Managers and MicroSectors FANG

Can any of the company-specific risk be diversified away by investing in both ETF Managers and MicroSectors FANG 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 ETF Managers and MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETF Managers Group and MicroSectors FANG Index, you can compare the effects of market volatilities on ETF Managers and MicroSectors FANG 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 ETF Managers with a short position of MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETF Managers and MicroSectors FANG.

Diversification Opportunities for ETF Managers and MicroSectors FANG

0.0

Correlation Coefficient

ETF Managers  MicroSectors FANG

Pay attention - limited upside

The 3 months correlation between ETF and MicroSectors is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ETF Managers Group and MicroSectors FANG Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG Index and ETF Managers 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 ETF Managers Group are associated (or correlated) with MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG Index has no effect on the direction of ETF Managers i.e., ETF Managers and MicroSectors FANG go up and down completely randomly.

Pair Corralation between ETF Managers and MicroSectors FANG

If you would invest  3,976  in MicroSectors FANG Index on September 14, 2024 and sell it today you would earn a total of  60,342  from holding MicroSectors FANG Index or generate 1517.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

ETF Managers Group  vs.  MicroSectors FANG Index

ETF Managers Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

MicroSectors FANG Index

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors FANG Index are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, MicroSectors FANG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ETF Managers and MicroSectors FANG

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

The idea behind ETF Managers Group and MicroSectors FANG Index 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..