Correlation Between MicroSectors FANG and BlackRock AAA
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and BlackRock AAA 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 BlackRock AAA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and BlackRock AAA CLO, you can compare the effects of market volatilities on MicroSectors FANG and BlackRock AAA 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 BlackRock AAA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and BlackRock AAA.
Diversification Opportunities for MicroSectors FANG and BlackRock AAA
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and BlackRock is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and BlackRock AAA CLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock AAA CLO 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 Index are associated (or correlated) with BlackRock AAA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock AAA CLO has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and BlackRock AAA go up and down completely randomly.
Pair Corralation between MicroSectors FANG and BlackRock AAA
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the BlackRock AAA. In addition to that, MicroSectors FANG is 67.81 times more volatile than BlackRock AAA CLO. It trades about -0.07 of its total potential returns per unit of risk. BlackRock AAA CLO is currently generating about 0.42 per unit of volatility. If you would invest 5,166 in BlackRock AAA CLO on August 30, 2024 and sell it today you would earn a total of 30.00 from holding BlackRock AAA CLO or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MicroSectors FANG Index vs. BlackRock AAA CLO
Performance |
| Timeline |
| MicroSectors FANG Index |
| BlackRock AAA CLO |
MicroSectors FANG and BlackRock AAA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and BlackRock AAA
The main advantage of trading using opposite MicroSectors FANG and BlackRock AAA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, BlackRock AAA 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 BlackRock AAA will offset losses from the drop in BlackRock AAA's long position.| MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. Direxion Daily Technology | MicroSectors FANG vs. Direxion Daily SP |
| BlackRock AAA vs. Janus Detroit Street | BlackRock AAA vs. Janus Detroit Street | BlackRock AAA vs. VanEck ETF Trust | BlackRock AAA vs. Panagram Bbb B Clo |
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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