Correlation Between MicroSectors FANG and IShares Cohen
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and IShares Cohen 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 Cohen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG ETN and iShares Cohen Steers, you can compare the effects of market volatilities on MicroSectors FANG and IShares Cohen 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 Cohen. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and IShares Cohen.
Diversification Opportunities for MicroSectors FANG and IShares Cohen
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MicroSectors and IShares is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and iShares Cohen Steers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Cohen Steers 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 ETN are associated (or correlated) with IShares Cohen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Cohen Steers has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and IShares Cohen go up and down completely randomly.
Pair Corralation between MicroSectors FANG and IShares Cohen
Given the investment horizon of 90 days MicroSectors FANG ETN is expected to generate 1.34 times more return on investment than IShares Cohen. However, MicroSectors FANG is 1.34 times more volatile than iShares Cohen Steers. It trades about 0.13 of its potential returns per unit of risk. iShares Cohen Steers is currently generating about 0.17 per unit of risk. If you would invest 5,780 in MicroSectors FANG ETN on November 9, 2024 and sell it today you would earn a total of 239.00 from holding MicroSectors FANG ETN or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG ETN vs. iShares Cohen Steers
Performance |
| Timeline |
| MicroSectors FANG ETN |
| iShares Cohen Steers |
MicroSectors FANG and IShares Cohen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and IShares Cohen
The main advantage of trading using opposite MicroSectors FANG and IShares Cohen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, IShares Cohen 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 Cohen will offset losses from the drop in IShares Cohen's long position.| MicroSectors FANG vs. iShares Nasdaq 100 ex | MicroSectors FANG vs. Freedom Day Dividend | MicroSectors FANG vs. Franklin Templeton ETF | MicroSectors FANG vs. iShares MSCI China |
| IShares Cohen vs. SPDR Dow Jones | IShares Cohen vs. iShares Real Estate | IShares Cohen vs. iShares North American | IShares Cohen vs. iShares Utilities ETF |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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