Correlation Between MicroSectors FANG and AllianzIM Equity
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and AllianzIM Equity 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 AllianzIM Equity 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 AllianzIM Equity Buffer15, you can compare the effects of market volatilities on MicroSectors FANG and AllianzIM Equity 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 AllianzIM Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and AllianzIM Equity.
Diversification Opportunities for MicroSectors FANG and AllianzIM Equity
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MicroSectors and AllianzIM is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and AllianzIM Equity Buffer15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AllianzIM Equity Buffer15 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 AllianzIM Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AllianzIM Equity Buffer15 has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and AllianzIM Equity go up and down completely randomly.
Pair Corralation between MicroSectors FANG and AllianzIM Equity
Given the investment horizon of 90 days MicroSectors FANG ETN is expected to generate 2.4 times more return on investment than AllianzIM Equity. However, MicroSectors FANG is 2.4 times more volatile than AllianzIM Equity Buffer15. It trades about 0.12 of its potential returns per unit of risk. AllianzIM Equity Buffer15 is currently generating about 0.14 per unit of risk. If you would invest 4,810 in MicroSectors FANG ETN on August 25, 2024 and sell it today you would earn a total of 560.00 from holding MicroSectors FANG ETN or generate 11.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
MicroSectors FANG ETN vs. AllianzIM Equity Buffer15
Performance |
| Timeline |
| MicroSectors FANG ETN |
| AllianzIM Equity Buffer15 |
MicroSectors FANG and AllianzIM Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and AllianzIM Equity
The main advantage of trading using opposite MicroSectors FANG and AllianzIM Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, AllianzIM Equity 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 AllianzIM Equity will offset losses from the drop in AllianzIM Equity's long position.| MicroSectors FANG vs. iShares Dividend and | MicroSectors FANG vs. Martin Currie Sustainable | MicroSectors FANG vs. VictoryShares THB Mid | MicroSectors FANG vs. Mast Global Battery |
| AllianzIM Equity vs. First Trust Cboe | AllianzIM Equity vs. FT Cboe Vest | AllianzIM Equity vs. Innovator SP 500 | AllianzIM Equity vs. Innovator Equity Power |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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