Correlation Between MicroSectors FANG and Guinness Atkinson
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Guinness Atkinson 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 Guinness Atkinson 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 Guinness Atkinson Funds, you can compare the effects of market volatilities on MicroSectors FANG and Guinness Atkinson 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 Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Guinness Atkinson.
Diversification Opportunities for MicroSectors FANG and Guinness Atkinson
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MicroSectors and Guinness is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Guinness Atkinson Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Funds 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 Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Funds has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Guinness Atkinson go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Guinness Atkinson
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 3.5 times more return on investment than Guinness Atkinson. However, MicroSectors FANG is 3.5 times more volatile than Guinness Atkinson Funds. It trades about 0.22 of its potential returns per unit of risk. Guinness Atkinson Funds is currently generating about -0.04 per unit of risk. If you would invest 38,831 in MicroSectors FANG Index on September 12, 2024 and sell it today you would earn a total of 23,935 from holding MicroSectors FANG Index or generate 61.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Guinness Atkinson Funds
Performance |
| Timeline |
| MicroSectors FANG Index |
| Guinness Atkinson Funds |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
MicroSectors FANG and Guinness Atkinson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Guinness Atkinson
The main advantage of trading using opposite MicroSectors FANG and Guinness Atkinson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Guinness Atkinson 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 Guinness Atkinson will offset losses from the drop in Guinness Atkinson'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 |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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