Correlation Between MicroSectors FANG and FT Vest
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and FT Vest 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 FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and FT Vest Nasdaq 100, you can compare the effects of market volatilities on MicroSectors FANG and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and FT Vest.
Diversification Opportunities for MicroSectors FANG and FT Vest
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectors and QMNV is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and FT Vest Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Nasdaq 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 Index are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Nasdaq has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and FT Vest go up and down completely randomly.
Pair Corralation between MicroSectors FANG and FT Vest
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 18.12 times more return on investment than FT Vest. However, MicroSectors FANG is 18.12 times more volatile than FT Vest Nasdaq 100. It trades about 0.11 of its potential returns per unit of risk. FT Vest Nasdaq 100 is currently generating about 0.5 per unit of risk. If you would invest 16,362 in MicroSectors FANG Index on September 12, 2024 and sell it today you would earn a total of 46,322 from holding MicroSectors FANG Index or generate 283.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.14% |
| Values | Daily Returns |
MicroSectors FANG Index vs. FT Vest Nasdaq 100
Performance |
| Timeline |
| MicroSectors FANG Index |
| FT Vest Nasdaq |
MicroSectors FANG and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and FT Vest
The main advantage of trading using opposite MicroSectors FANG and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. MicroSectors Solactive FANG | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Technology |
| FT Vest vs. FT Vest Equity | FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. JPMorgan Fundamental Data |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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