Correlation Between MicroSectors FANG and Loncar Cancer

Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Loncar Cancer 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 Loncar Cancer 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 Loncar Cancer Immunotherapy, you can compare the effects of market volatilities on MicroSectors FANG and Loncar Cancer 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 Loncar Cancer. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Loncar Cancer.

Diversification Opportunities for MicroSectors FANG and Loncar Cancer

-0.75

Correlation Coefficient

MicroSectors FANG  Loncar Cancer

Pay attention - limited upside

The 3 months correlation between MicroSectors and Loncar is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Loncar Cancer Immunotherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loncar Cancer Immuno 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 Loncar Cancer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loncar Cancer Immuno has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Loncar Cancer go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Loncar Cancer

Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 1.87 times more return on investment than Loncar Cancer. However, MicroSectors FANG is 1.87 times more volatile than Loncar Cancer Immunotherapy. It trades about 0.16 of its potential returns per unit of risk. Loncar Cancer Immunotherapy is currently generating about -0.19 per unit of risk. If you would invest  41,669  in MicroSectors FANG Index on September 20, 2024 and sell it today you would earn a total of  17,971  from holding MicroSectors FANG Index or generate 43.13% 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.  Loncar Cancer Immunotherapy

MicroSectors FANG Index

Risk-Adjusted Performance

12 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors FANG Index are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, MicroSectors FANG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Loncar Cancer Immuno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loncar Cancer Immunotherapy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Etf's fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Pair Trading with MicroSectors FANG and Loncar Cancer

The main advantage of trading using opposite MicroSectors FANG and Loncar Cancer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Loncar Cancer 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 Loncar Cancer will offset losses from the drop in Loncar Cancer's long position.

The idea behind MicroSectors FANG Index and Loncar Cancer Immunotherapy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.