Correlation Between MicroSectors FANG and Elevation Series

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Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Elevation Series 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 Elevation Series 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 Elevation Series Trust, you can compare the effects of market volatilities on MicroSectors FANG and Elevation Series 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 Elevation Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Elevation Series.

Diversification Opportunities for MicroSectors FANG and Elevation Series

MicroSectorsElevationDiversified AwayMicroSectorsElevationDiversified Away100%
-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between MicroSectors and Elevation is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Elevation Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevation Series Trust 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 Elevation Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevation Series Trust has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Elevation Series go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Elevation Series

Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the Elevation Series. In addition to that, MicroSectors FANG is 4.1 times more volatile than Elevation Series Trust. It trades about -0.1 of its total potential returns per unit of risk. Elevation Series Trust is currently generating about 0.03 per unit of volatility. If you would invest  5,692  in Elevation Series Trust on November 25, 2024 and sell it today you would earn a total of  24.00  from holding Elevation Series Trust or generate 0.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MicroSectors FANG Index  vs.  Elevation Series Trust

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -505101520
JavaScript chart by amCharts 3.21.15FNGO SRHR
       Timeline  
MicroSectors FANG Index 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors FANG Index are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, MicroSectors FANG displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb80859095100105
Elevation Series Trust 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Elevation Series Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Elevation Series is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb555657585960

MicroSectors FANG and Elevation Series Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.62-7.21-4.79-2.38-0.022.424.927.429.9212.42 0.10.20.30.4
JavaScript chart by amCharts 3.21.15FNGO SRHR
       Returns  

Pair Trading with MicroSectors FANG and Elevation Series

The main advantage of trading using opposite MicroSectors FANG and Elevation Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Elevation Series 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 Elevation Series will offset losses from the drop in Elevation Series' long position.
The idea behind MicroSectors FANG Index and Elevation Series Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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