Correlation Between MicroSectors FANG and AB Active
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and AB Active 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 AB Active 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 AB Active ETFs,, you can compare the effects of market volatilities on MicroSectors FANG and AB Active 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 AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and AB Active.
Diversification Opportunities for MicroSectors FANG and AB Active
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and SYFI is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, 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 AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and AB Active go up and down completely randomly.
Pair Corralation between MicroSectors FANG and AB Active
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the AB Active. In addition to that, MicroSectors FANG is 13.44 times more volatile than AB Active ETFs,. It trades about -0.25 of its total potential returns per unit of risk. AB Active ETFs, is currently generating about 0.23 per unit of volatility. If you would invest 3,546 in AB Active ETFs, on September 1, 2024 and sell it today you would earn a total of 49.00 from holding AB Active ETFs, or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MicroSectors FANG Index vs. AB Active ETFs,
Performance |
| Timeline |
| MicroSectors FANG Index |
| AB Active ETFs, |
MicroSectors FANG and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and AB Active
The main advantage of trading using opposite MicroSectors FANG and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, AB Active 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 AB Active will offset losses from the drop in AB Active'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 |
| AB Active vs. BlackRock High Yield | AB Active vs. Hartford Short Duration | AB Active vs. SSGA Active Trust | AB Active vs. Aquagold International |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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