Correlation Between Ocean Park and MicroSectors FANG
Can any of the company-specific risk be diversified away by investing in both Ocean Park 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 Ocean Park and MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Park High and MicroSectors FANG Index, you can compare the effects of market volatilities on Ocean Park 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 Ocean Park with a short position of MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Park and MicroSectors FANG.
Diversification Opportunities for Ocean Park and MicroSectors FANG
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Ocean and MicroSectors is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Park High 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 Ocean Park 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 Ocean Park High 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 Ocean Park i.e., Ocean Park and MicroSectors FANG go up and down completely randomly.
Pair Corralation between Ocean Park and MicroSectors FANG
Given the investment horizon of 90 days Ocean Park High is expected to generate 0.05 times more return on investment than MicroSectors FANG. However, Ocean Park High is 20.54 times less risky than MicroSectors FANG. It trades about 0.1 of its potential returns per unit of risk. MicroSectors FANG Index is currently generating about -0.11 per unit of risk. If you would invest 2,437 in Ocean Park High on November 28, 2024 and sell it today you would earn a total of 84.40 from holding Ocean Park High or generate 3.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 31.98% |
| Values | Daily Returns |
Ocean Park High vs. MicroSectors FANG Index
Performance |
| Timeline |
| Ocean Park High |
| MicroSectors FANG Index |
Ocean Park and MicroSectors FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocean Park and MicroSectors FANG
The main advantage of trading using opposite Ocean Park and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Park 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.| Ocean Park vs. Columbia Diversified Fixed | Ocean Park vs. MFS Active Core | Ocean Park vs. Doubleline Etf Trust | Ocean Park vs. Virtus Newfleet ABSMBS |
| MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. Direxion Daily Technology | MicroSectors FANG vs. Direxion Daily SP |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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