Correlation Between MicroSectors Solactive and Kelly Strategic

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

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

Diversification Opportunities for MicroSectors Solactive and Kelly Strategic

0.53

Correlation Coefficient

MicroSectors Solactive  Kelly Strategic

Very weak diversification

The 3 months correlation between MicroSectors and Kelly is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Solactive FANG and Kelly Strategic Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kelly Strategic Mana and MicroSectors Solactive 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 MicroSectors Solactive FANG are associated (or correlated) with Kelly Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kelly Strategic Mana has no effect on the direction of MicroSectors Solactive i.e., MicroSectors Solactive and Kelly Strategic go up and down completely randomly.

Pair Corralation between MicroSectors Solactive and Kelly Strategic

Given the investment horizon of 90 days MicroSectors Solactive FANG is expected to generate 3.71 times more return on investment than Kelly Strategic. However, MicroSectors Solactive is 3.71 times more volatile than Kelly Strategic Management. It trades about 0.1 of its potential returns per unit of risk. Kelly Strategic Management is currently generating about 0.07 per unit of risk. If you would invest  2,672  in MicroSectors Solactive FANG on October 3, 2024 and sell it today you would earn a total of  13,541  from holding MicroSectors Solactive FANG or generate 506.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	26.87%
Values	Daily Returns

MicroSectors Solactive FANG  vs.  Kelly Strategic Management

MicroSectors Solactive

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors Solactive FANG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, MicroSectors Solactive showed solid returns over the last few months and may actually be approaching a breakup point.

Kelly Strategic Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kelly Strategic Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Kelly Strategic is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MicroSectors Solactive and Kelly Strategic

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

The idea behind MicroSectors Solactive FANG and Kelly Strategic Management 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.