Correlation Between MicroSectors FANG and IShares IBonds
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and IShares IBonds 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 IShares IBonds 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 iShares iBonds Dec, you can compare the effects of market volatilities on MicroSectors FANG and IShares IBonds 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 IShares IBonds. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and IShares IBonds.
Diversification Opportunities for MicroSectors FANG and IShares IBonds
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and IShares is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and iShares iBonds Dec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBonds Dec 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 IShares IBonds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBonds Dec has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and IShares IBonds go up and down completely randomly.
Pair Corralation between MicroSectors FANG and IShares IBonds
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the IShares IBonds. In addition to that, MicroSectors FANG is 146.0 times more volatile than iShares iBonds Dec. It trades about -0.13 of its total potential returns per unit of risk. iShares iBonds Dec is currently generating about 0.4 per unit of volatility. If you would invest 2,499 in iShares iBonds Dec on October 9, 2024 and sell it today you would earn a total of 7.00 from holding iShares iBonds Dec or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. iShares iBonds Dec
Performance |
| Timeline |
| MicroSectors FANG Index |
| iShares iBonds Dec |
MicroSectors FANG and IShares IBonds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and IShares IBonds
The main advantage of trading using opposite MicroSectors FANG and IShares IBonds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, IShares IBonds 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 IShares IBonds will offset losses from the drop in IShares IBonds' 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 |
| IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec | IShares IBonds vs. iShares iBonds Dec |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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