Correlation Between MicroSectors FANG and IShares Expanded
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and IShares Expanded 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 IShares Expanded 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 iShares Expanded Tech Software, you can compare the effects of market volatilities on MicroSectors FANG and IShares Expanded 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 IShares Expanded. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and IShares Expanded.
Diversification Opportunities for MicroSectors FANG and IShares Expanded
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MicroSectors and IShares is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and iShares Expanded Tech Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded Tech 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 IShares Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and IShares Expanded go up and down completely randomly.
Pair Corralation between MicroSectors FANG and IShares Expanded
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 1.95 times more return on investment than IShares Expanded. However, MicroSectors FANG is 1.95 times more volatile than iShares Expanded Tech Software. It trades about 0.15 of its potential returns per unit of risk. iShares Expanded Tech Software is currently generating about 0.03 per unit of risk. If you would invest 9,924 in MicroSectors FANG Index on June 8, 2025 and sell it today you would earn a total of 1,917 from holding MicroSectors FANG Index or generate 19.32% 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. iShares Expanded Tech Software
Performance |
| Timeline |
| MicroSectors FANG Index |
| iShares Expanded Tech |
MicroSectors FANG and IShares Expanded Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and IShares Expanded
The main advantage of trading using opposite MicroSectors FANG and IShares Expanded positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, IShares Expanded 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 IShares Expanded will offset losses from the drop in IShares Expanded's long position.| MicroSectors FANG vs. MicroSectors FANG ETN | MicroSectors FANG vs. Direxion Daily Dow | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Cnsmr |
| IShares Expanded vs. First Trust Technology | IShares Expanded vs. Fidelity MSCI Information | IShares Expanded vs. First Trust Nasdaq | IShares Expanded vs. iShares Global Tech |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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