Correlation Between MicroSectors FANG and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Dimensional ETF 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 FANG and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG ETN and Dimensional ETF Trust, you can compare the effects of market volatilities on MicroSectors FANG and Dimensional ETF 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 FANG with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Dimensional ETF.
Diversification Opportunities for MicroSectors FANG and Dimensional ETF
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectors and Dimensional is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust and MicroSectors FANG 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 FANG ETN are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Dimensional ETF go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Dimensional ETF
Given the investment horizon of 90 days MicroSectors FANG ETN is expected to generate 1.17 times more return on investment than Dimensional ETF. However, MicroSectors FANG is 1.17 times more volatile than Dimensional ETF Trust. It trades about 0.24 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.02 per unit of risk. If you would invest 4,814 in MicroSectors FANG ETN on September 14, 2024 and sell it today you would earn a total of 1,064 from holding MicroSectors FANG ETN or generate 22.11% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
MicroSectors FANG ETN vs. Dimensional ETF Trust
Performance |
Timeline |
MicroSectors FANG ETN |
Dimensional ETF Trust |
MicroSectors FANG and Dimensional ETF Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MicroSectors FANG and Dimensional ETF
The main advantage of trading using opposite MicroSectors FANG and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.MicroSectors FANG vs. Freedom Day Dividend | MicroSectors FANG vs. Franklin Templeton ETF | MicroSectors FANG vs. iShares MSCI China | MicroSectors FANG vs. Tidal Trust II |
Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional International Value | Dimensional ETF vs. Dimensional ETF Trust |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |