Correlation Between MicroSectors FANG and SGI Dynamic
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and SGI Dynamic 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 SGI Dynamic 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 SGI Dynamic Tactical, you can compare the effects of market volatilities on MicroSectors FANG and SGI Dynamic 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 SGI Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and SGI Dynamic.
Diversification Opportunities for MicroSectors FANG and SGI Dynamic
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and SGI is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and SGI Dynamic Tactical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGI Dynamic Tactical 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 SGI Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGI Dynamic Tactical has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and SGI Dynamic go up and down completely randomly.
Pair Corralation between MicroSectors FANG and SGI Dynamic
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the SGI Dynamic. In addition to that, MicroSectors FANG is 4.71 times more volatile than SGI Dynamic Tactical. It trades about -0.24 of its total potential returns per unit of risk. SGI Dynamic Tactical is currently generating about 0.33 per unit of volatility. If you would invest 3,046 in SGI Dynamic Tactical on September 3, 2024 and sell it today you would earn a total of 159.00 from holding SGI Dynamic Tactical or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. SGI Dynamic Tactical
Performance |
| Timeline |
| MicroSectors FANG Index |
| SGI Dynamic Tactical |
MicroSectors FANG and SGI Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and SGI Dynamic
The main advantage of trading using opposite MicroSectors FANG and SGI Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, SGI Dynamic 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 SGI Dynamic will offset losses from the drop in SGI Dynamic'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 |
| SGI Dynamic vs. iShares Core Aggressive | SGI Dynamic vs. Tidal Trust II | SGI Dynamic vs. SPDR SSgA Multi Asset | SGI Dynamic vs. SPDR SSgA Global |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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