Correlation Between MicroSectors FANG and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Barclays Capital 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 Barclays Capital 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 Barclays Capital, you can compare the effects of market volatilities on MicroSectors FANG and Barclays Capital 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 Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Barclays Capital.
Diversification Opportunities for MicroSectors FANG and Barclays Capital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MicroSectors and Barclays is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital 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 Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Barclays Capital go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Barclays Capital
If you would invest 2,840 in Barclays Capital on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Barclays Capital or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.79% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Barclays Capital
Performance |
| Timeline |
| MicroSectors FANG Index |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MicroSectors FANG and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Barclays Capital
The main advantage of trading using opposite MicroSectors FANG and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Barclays Capital 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 Barclays Capital will offset losses from the drop in Barclays Capital'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 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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