Correlation Between MicroSectors FANG and Capital Group
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Capital Group 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 Capital Group 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 Capital Group International, you can compare the effects of market volatilities on MicroSectors FANG and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Capital Group.
Diversification Opportunities for MicroSectors FANG and Capital Group
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between MicroSectors and Capital is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Capital Group go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Capital Group
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the Capital Group. In addition to that, MicroSectors FANG is 4.02 times more volatile than Capital Group International. It trades about -0.07 of its total potential returns per unit of risk. Capital Group International is currently generating about 0.13 per unit of volatility. If you would invest 2,875 in Capital Group International on November 28, 2024 and sell it today you would earn a total of 56.00 from holding Capital Group International or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Capital Group International
Performance |
| Timeline |
| MicroSectors FANG Index |
| Capital Group Intern |
MicroSectors FANG and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Capital Group
The main advantage of trading using opposite MicroSectors FANG and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group'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 |
| Capital Group vs. Strategy Shares | Capital Group vs. Freedom Day Dividend | Capital Group vs. Franklin Templeton ETF | Capital Group vs. iShares MSCI China |
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.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Global Correlations Find global opportunities by holding instruments from different markets |