Correlation Between MicroSectors FANG and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Innovator ETFs 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 Innovator ETFs 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 Innovator ETFs Trust, you can compare the effects of market volatilities on MicroSectors FANG and Innovator ETFs 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 Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Innovator ETFs.
Diversification Opportunities for MicroSectors FANG and Innovator ETFs
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MicroSectors and Innovator is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs 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 ETN are associated (or correlated) with Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Innovator ETFs go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Innovator ETFs
Given the investment horizon of 90 days MicroSectors FANG ETN is expected to generate 3.98 times more return on investment than Innovator ETFs. However, MicroSectors FANG is 3.98 times more volatile than Innovator ETFs Trust. It trades about 0.16 of its potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.04 per unit of risk. If you would invest 5,052 in MicroSectors FANG ETN on November 2, 2024 and sell it today you would earn a total of 832.00 from holding MicroSectors FANG ETN or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG ETN vs. Innovator ETFs Trust
Performance |
| Timeline |
| MicroSectors FANG ETN |
| Innovator ETFs Trust |
MicroSectors FANG and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Innovator ETFs
The main advantage of trading using opposite MicroSectors FANG and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Innovator ETFs 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 Innovator ETFs will offset losses from the drop in Innovator ETFs' long position.| MicroSectors FANG vs. MicroSectors Gold 3X | MicroSectors FANG vs. MicroSectors Travel 3X | MicroSectors FANG vs. MicroSectors Travel 3X | MicroSectors FANG vs. MicroSectors FANG Index |
| Innovator ETFs vs. Innovator MSCI EAFE | Innovator ETFs vs. Innovator MSCI EAFE | Innovator ETFs vs. Innovator ETFs Trust | Innovator ETFs vs. Innovator Russell 2000 |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |