Correlation Between MicroSectors FANG and Jacob Forward
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Jacob Forward 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 Jacob Forward 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 Jacob Forward ETF, you can compare the effects of market volatilities on MicroSectors FANG and Jacob Forward 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 Jacob Forward. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Jacob Forward.
Diversification Opportunities for MicroSectors FANG and Jacob Forward
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and Jacob is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Jacob Forward ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Forward ETF 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 Jacob Forward. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Forward ETF has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Jacob Forward go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Jacob Forward
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the Jacob Forward. In addition to that, MicroSectors FANG is 1.85 times more volatile than Jacob Forward ETF. It trades about -0.07 of its total potential returns per unit of risk. Jacob Forward ETF is currently generating about 0.33 per unit of volatility. If you would invest 1,077 in Jacob Forward ETF on August 30, 2024 and sell it today you would earn a total of 180.00 from holding Jacob Forward ETF or generate 16.71% 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. Jacob Forward ETF
Performance |
| Timeline |
| MicroSectors FANG Index |
| Jacob Forward ETF |
MicroSectors FANG and Jacob Forward Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Jacob Forward
The main advantage of trading using opposite MicroSectors FANG and Jacob Forward positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Jacob Forward 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 Jacob Forward will offset losses from the drop in Jacob Forward'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 |
| Jacob Forward vs. Amplify Thematic All Stars | Jacob Forward vs. Jacob Micro Cap | Jacob Forward vs. Main Thematic Innovation |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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