Correlation Between Global X and MicroSectors FANG
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and MicroSectors FANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Funds and MicroSectors FANG Index, you can compare the effects of market volatilities on Global X 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 Global X with a short position of MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and MicroSectors FANG.
Diversification Opportunities for Global X and MicroSectors FANG
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and MicroSectors is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Global X Funds 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 Global X 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 Global X Funds 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 Global X i.e., Global X and MicroSectors FANG go up and down completely randomly.
Pair Corralation between Global X and MicroSectors FANG
Considering the 90-day investment horizon Global X Funds is expected to generate 0.21 times more return on investment than MicroSectors FANG. However, Global X Funds is 4.78 times less risky than MicroSectors FANG. It trades about 0.02 of its potential returns per unit of risk. MicroSectors FANG Index is currently generating about -0.1 per unit of risk. If you would invest 2,465 in Global X Funds on November 28, 2024 and sell it today you would earn a total of 174.00 from holding Global X Funds or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.71% |
| Values | Daily Returns |
Global X Funds vs. MicroSectors FANG Index
Performance |
| Timeline |
| Global X Funds |
| MicroSectors FANG Index |
Global X and MicroSectors FANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and MicroSectors FANG
The main advantage of trading using opposite Global X and MicroSectors FANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.| Global X vs. Strategy Shares | Global X vs. Freedom Day Dividend | Global X vs. Franklin Templeton ETF | Global X vs. iShares MSCI China |
| 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |