Correlation Between MicroSectors FANG and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Sprott Junior 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 Sprott Junior 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 Sprott Junior Uranium, you can compare the effects of market volatilities on MicroSectors FANG and Sprott Junior 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 Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Sprott Junior.
Diversification Opportunities for MicroSectors FANG and Sprott Junior
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MicroSectors and Sprott is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and Sprott Junior Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Uranium 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 Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Uranium has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Sprott Junior go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Sprott Junior
Given the investment horizon of 90 days MicroSectors FANG is expected to generate 3.37 times less return on investment than Sprott Junior. But when comparing it to its historical volatility, MicroSectors FANG ETN is 2.55 times less risky than Sprott Junior. It trades about 0.08 of its potential returns per unit of risk. Sprott Junior Uranium is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,858 in Sprott Junior Uranium on November 1, 2024 and sell it today you would earn a total of 148.00 from holding Sprott Junior Uranium or generate 7.97% 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. Sprott Junior Uranium
Performance |
| Timeline |
| MicroSectors FANG ETN |
| Sprott Junior Uranium |
MicroSectors FANG and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Sprott Junior
The main advantage of trading using opposite MicroSectors FANG and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Sprott Junior 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 Sprott Junior will offset losses from the drop in Sprott Junior's long position.| MicroSectors FANG vs. Freedom Day Dividend | MicroSectors FANG vs. Franklin Templeton ETF | MicroSectors FANG vs. iShares MSCI China | MicroSectors FANG vs. Tidal Trust II |
| Sprott Junior vs. Sprott Junior Copper | Sprott Junior vs. Sprott Energy Transition | Sprott Junior vs. Sprott Lithium Miners | Sprott Junior vs. Sprott Uranium Miners |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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