Correlation Between MicroSectors FANG and Invesco New
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Invesco New 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 Invesco New 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 Invesco New York, you can compare the effects of market volatilities on MicroSectors FANG and Invesco New 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 Invesco New. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Invesco New.
Diversification Opportunities for MicroSectors FANG and Invesco New
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectors and Invesco is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and Invesco New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco New York 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 Invesco New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco New York has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Invesco New go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Invesco New
Given the investment horizon of 90 days MicroSectors FANG ETN is expected to generate 3.59 times more return on investment than Invesco New. However, MicroSectors FANG is 3.59 times more volatile than Invesco New York. It trades about 0.1 of its potential returns per unit of risk. Invesco New York is currently generating about 0.05 per unit of risk. If you would invest 3,231 in MicroSectors FANG ETN on September 1, 2024 and sell it today you would earn a total of 2,147 from holding MicroSectors FANG ETN or generate 66.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG ETN vs. Invesco New York
Performance |
| Timeline |
| MicroSectors FANG ETN |
| Invesco New York |
MicroSectors FANG and Invesco New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Invesco New
The main advantage of trading using opposite MicroSectors FANG and Invesco New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Invesco New 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 Invesco New will offset losses from the drop in Invesco New's long position.| MicroSectors FANG vs. Freedom Day Dividend | MicroSectors FANG vs. iShares MSCI China | MicroSectors FANG vs. iShares Dividend and | MicroSectors FANG vs. SmartETFs Dividend Builder |
| Invesco New vs. Invesco California AMT Free | Invesco New vs. iShares New York | Invesco New vs. Invesco VRDO Tax Free | Invesco New vs. Invesco National AMT Free |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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