Correlation Between MicroSectors Big and Listed Funds

Can any of the company-specific risk be diversified away by investing in both MicroSectors Big and Listed Funds 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 Big and Listed Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MicroSectors Big Oil and Listed Funds Trust, you can compare the effects of market volatilities on MicroSectors Big and Listed Funds 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 Big with a short position of Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors Big and Listed Funds.

Diversification Opportunities for MicroSectors Big and Listed Funds

-0.47

Correlation Coefficient

MicroSectors Big  Listed Funds

Very good diversification

The 3 months correlation between MicroSectors and Listed is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors Big Oil and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust and MicroSectors Big 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 Big Oil are associated (or correlated) with Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of MicroSectors Big i.e., MicroSectors Big and Listed Funds go up and down completely randomly.

Pair Corralation between MicroSectors Big and Listed Funds

If you would invest  1,006  in Listed Funds Trust on June 16, 2024 and sell it today you would earn a total of  39.00  from holding Listed Funds Trust or generate 3.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

MicroSectors Big Oil  vs.  Listed Funds Trust

MicroSectors Big Oil

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days MicroSectors Big Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively unsteady technical and fundamental indicators, MicroSectors Big unveiled solid returns over the last few months and may actually be approaching a breakup point.

Listed Funds Trust

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Listed Funds Trust are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Listed Funds may actually be approaching a critical reversion point that can send shares even higher in October 2024.

Pair Trading with MicroSectors Big and Listed Funds

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

The idea behind MicroSectors Big Oil and Listed Funds Trust 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.