Correlation Between MicroSectors FANG and YieldMax MSTR

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

Diversification Opportunities for MicroSectors FANG and YieldMax MSTR

-0.16

Correlation Coefficient

MicroSectors FANG  YieldMax MSTR

Good diversification

The 3 months correlation between MicroSectors and YieldMax is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and YieldMax MSTR Option in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YieldMax MSTR Option 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 YieldMax MSTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YieldMax MSTR Option has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and YieldMax MSTR go up and down completely randomly.

Pair Corralation between MicroSectors FANG and YieldMax MSTR

If you would invest  1,925  in YieldMax MSTR Option on May 1, 2025 and sell it today you would earn a total of  114.00  from holding YieldMax MSTR Option or generate 5.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.44%
Values	Daily Returns

MicroSectors FANG Index  vs.  YieldMax MSTR Option

MicroSectors FANG Index

Risk-Adjusted Performance

OK

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

YieldMax MSTR Option

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in YieldMax MSTR Option are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, YieldMax MSTR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MicroSectors FANG and YieldMax MSTR

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

The idea behind MicroSectors FANG Index and YieldMax MSTR Option 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.