Correlation Between MicroSectors FANG and UST Inc
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and UST Inc 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 UST Inc 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 ProShares Ultra 7 10, you can compare the effects of market volatilities on MicroSectors FANG and UST Inc 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 UST Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and UST Inc.
Diversification Opportunities for MicroSectors FANG and UST Inc
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectors and UST is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and ProShares Ultra 7 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra 7 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 UST Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra 7 has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and UST Inc go up and down completely randomly.
Pair Corralation between MicroSectors FANG and UST Inc
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 5.42 times more return on investment than UST Inc. However, MicroSectors FANG is 5.42 times more volatile than ProShares Ultra 7 10. It trades about 0.11 of its potential returns per unit of risk. ProShares Ultra 7 10 is currently generating about -0.01 per unit of risk. If you would invest 23,128 in MicroSectors FANG Index on November 9, 2024 and sell it today you would earn a total of 42,532 from holding MicroSectors FANG Index or generate 183.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. ProShares Ultra 7 10
Performance |
| Timeline |
| MicroSectors FANG Index |
| ProShares Ultra 7 |
MicroSectors FANG and UST Inc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and UST Inc
The main advantage of trading using opposite MicroSectors FANG and UST Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, UST Inc 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 UST Inc will offset losses from the drop in UST Inc'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 |
| UST Inc vs. ProShares Ultra 20 | UST Inc vs. Universal | UST Inc vs. Direxion Daily 7 10 | UST Inc vs. ProShares UltraShort 7 10 |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |