Correlation Between Mast Global and MicroSectors FANG

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

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

Diversification Opportunities for Mast Global and MicroSectors FANG

-0.12

Correlation Coefficient

Mast Global  MicroSectors FANG

Good diversification

The 3 months correlation between Mast and MicroSectors is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mast Global Battery and MicroSectors FANG ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG ETN and Mast Global 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 Mast Global Battery 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 ETN has no effect on the direction of Mast Global i.e., Mast Global and MicroSectors FANG go up and down completely randomly.

Pair Corralation between Mast Global and MicroSectors FANG

Allowing for the 90-day total investment horizon Mast Global Battery is expected to under-perform the MicroSectors FANG. But the etf apears to be less risky and, when comparing its historical volatility, Mast Global Battery is 1.51 times less risky than MicroSectors FANG. The etf trades about -0.04 of its potential returns per unit of risk. The MicroSectors FANG ETN is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,444  in MicroSectors FANG ETN on December 2, 2024 and sell it today you would earn a total of  109.00  from holding MicroSectors FANG ETN or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mast Global Battery  vs.  MicroSectors FANG ETN

Mast Global Battery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mast Global Battery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mast Global is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MicroSectors FANG ETN

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors FANG ETN are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MicroSectors FANG is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Mast Global and MicroSectors FANG

The main advantage of trading using opposite Mast Global and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mast Global 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 Mast Global Battery and MicroSectors FANG ETN 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.