Correlation Between MicroSectors FANG and Tradr 2X
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Tradr 2X 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 Tradr 2X 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 Tradr 2X Long, you can compare the effects of market volatilities on MicroSectors FANG and Tradr 2X 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 Tradr 2X. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Tradr 2X.
Diversification Opportunities for MicroSectors FANG and Tradr 2X
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MicroSectors and Tradr is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Tradr 2X Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tradr 2X Long 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 Tradr 2X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tradr 2X Long has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Tradr 2X go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Tradr 2X
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 2.37 times more return on investment than Tradr 2X. However, MicroSectors FANG is 2.37 times more volatile than Tradr 2X Long. It trades about 0.11 of its potential returns per unit of risk. Tradr 2X Long is currently generating about 0.13 per unit of risk. If you would invest 5,776 in MicroSectors FANG Index on August 30, 2024 and sell it today you would earn a total of 43,649 from holding MicroSectors FANG Index or generate 755.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 12.53% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Tradr 2X Long
Performance |
| Timeline |
| MicroSectors FANG Index |
| Tradr 2X Long |
MicroSectors FANG and Tradr 2X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Tradr 2X
The main advantage of trading using opposite MicroSectors FANG and Tradr 2X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Tradr 2X 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 Tradr 2X will offset losses from the drop in Tradr 2X'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 |
| Tradr 2X vs. ABIVAX Socit Anonyme | Tradr 2X vs. Morningstar Unconstrained Allocation | Tradr 2X vs. SPACE | Tradr 2X vs. Knife River |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |