Correlation Between MicroSectors FANG and Invesco BulletShares
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Invesco BulletShares 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 Invesco BulletShares 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 Invesco BulletShares 2026, you can compare the effects of market volatilities on MicroSectors FANG and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Invesco BulletShares.
Diversification Opportunities for MicroSectors FANG and Invesco BulletShares
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MicroSectors and Invesco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Invesco BulletShares 2026 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2026 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2026 has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Invesco BulletShares go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Invesco BulletShares
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 32.87 times more return on investment than Invesco BulletShares. However, MicroSectors FANG is 32.87 times more volatile than Invesco BulletShares 2026. It trades about 0.15 of its potential returns per unit of risk. Invesco BulletShares 2026 is currently generating about 0.17 per unit of risk. If you would invest 6,342 in MicroSectors FANG Index on November 2, 2024 and sell it today you would earn a total of 3,363 from holding MicroSectors FANG Index or generate 53.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Invesco BulletShares 2026
Performance |
| Timeline |
| MicroSectors FANG Index |
| Invesco BulletShares 2026 |
MicroSectors FANG and Invesco BulletShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Invesco BulletShares
The main advantage of trading using opposite MicroSectors FANG and Invesco BulletShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Invesco BulletShares 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 Invesco BulletShares will offset losses from the drop in Invesco BulletShares' 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |