Correlation Between MicroSectors FANG and IShares Agency
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and IShares Agency 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 Agency 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 Agency Bond, you can compare the effects of market volatilities on MicroSectors FANG and IShares Agency 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 Agency. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and IShares Agency.
Diversification Opportunities for MicroSectors FANG and IShares Agency
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MicroSectors and IShares is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and iShares Agency Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Agency Bond 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 Agency. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Agency Bond has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and IShares Agency go up and down completely randomly.
Pair Corralation between MicroSectors FANG and IShares Agency
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 15.31 times more return on investment than IShares Agency. However, MicroSectors FANG is 15.31 times more volatile than iShares Agency Bond. It trades about 0.14 of its potential returns per unit of risk. iShares Agency Bond is currently generating about 0.04 per unit of risk. If you would invest 7,600 in MicroSectors FANG Index on August 27, 2024 and sell it today you would earn a total of 611.00 from holding MicroSectors FANG Index or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. iShares Agency Bond
Performance |
| Timeline |
| MicroSectors FANG Index |
| iShares Agency Bond |
MicroSectors FANG and IShares Agency Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and IShares Agency
The main advantage of trading using opposite MicroSectors FANG and IShares Agency positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, IShares Agency 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 Agency will offset losses from the drop in IShares Agency's long position.| MicroSectors FANG vs. MicroSectors FANG ETN | MicroSectors FANG vs. Direxion Daily Dow | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Cnsmr |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |