Correlation Between MicroSectors FANG and DBX ETF
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and DBX 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 DBX 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 DBX ETF Trust, you can compare the effects of market volatilities on MicroSectors FANG and DBX 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 DBX ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and DBX ETF.
Diversification Opportunities for MicroSectors FANG and DBX ETF
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MicroSectors and DBX is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and DBX ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBX 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 DBX ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBX ETF Trust has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and DBX ETF go up and down completely randomly.
Pair Corralation between MicroSectors FANG and DBX ETF
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 4.47 times more return on investment than DBX ETF. However, MicroSectors FANG is 4.47 times more volatile than DBX ETF Trust. It trades about 0.23 of its potential returns per unit of risk. DBX ETF Trust is currently generating about 0.24 per unit of risk. If you would invest 33,221 in MicroSectors FANG Index on April 13, 2025 and sell it today you would earn a total of 10,169 from holding MicroSectors FANG Index or generate 30.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 43.55% |
| Values | Daily Returns |
MicroSectors FANG Index vs. DBX ETF Trust
Performance |
| Timeline |
| MicroSectors FANG Index |
Risk-Adjusted Performance
Solid
Weak | Strong |
| DBX ETF Trust |
MicroSectors FANG and DBX ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and DBX ETF
The main advantage of trading using opposite MicroSectors FANG and DBX ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, DBX 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 DBX ETF will offset losses from the drop in DBX 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 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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