Correlation Between MicroSectors FANG and Touchstone ETF
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Touchstone ETF 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 Touchstone ETF 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 Touchstone ETF Trust, you can compare the effects of market volatilities on MicroSectors FANG and Touchstone ETF 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 Touchstone ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Touchstone ETF.
Diversification Opportunities for MicroSectors FANG and Touchstone ETF
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MicroSectors and Touchstone is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Touchstone ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Touchstone ETF Trust 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 Touchstone ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Touchstone ETF Trust has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Touchstone ETF go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Touchstone ETF
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 45.07 times more return on investment than Touchstone ETF. However, MicroSectors FANG is 45.07 times more volatile than Touchstone ETF Trust. It trades about 0.14 of its potential returns per unit of risk. Touchstone ETF Trust is currently generating about -0.09 per unit of risk. If you would invest 58,060 in MicroSectors FANG Index on October 9, 2024 and sell it today you would earn a total of 6,640 from holding MicroSectors FANG Index or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Touchstone ETF Trust
Performance |
| Timeline |
| MicroSectors FANG Index |
| Touchstone ETF Trust |
MicroSectors FANG and Touchstone ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Touchstone ETF
The main advantage of trading using opposite MicroSectors FANG and Touchstone ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Touchstone ETF 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 Touchstone ETF will offset losses from the drop in Touchstone ETF'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 |
| Touchstone ETF vs. Valued Advisers Trust | Touchstone ETF vs. Columbia Diversified Fixed | Touchstone ETF vs. Principal Exchange Traded Funds | Touchstone ETF vs. Doubleline Etf Trust |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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