Correlation Between IShares Expanded and MicroSectors FANG

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

By analyzing existing cross correlation between iShares Expanded Tech and MicroSectors FANG ETN, you can compare the effects of market volatilities on IShares Expanded and MicroSectors FANG 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 IShares Expanded with a short position of MicroSectors FANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Expanded and MicroSectors FANG.

Diversification Opportunities for IShares Expanded and MicroSectors FANG

0.98

Correlation Coefficient

IShares Expanded  MicroSectors FANG

Almost no diversification

The 3 months correlation between IShares and MicroSectors is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Expanded Tech and MicroSectors FANG ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroSectors FANG ETN and IShares Expanded 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 iShares Expanded Tech are associated (or correlated) with MicroSectors FANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroSectors FANG ETN has no effect on the direction of IShares Expanded i.e., IShares Expanded and MicroSectors FANG go up and down completely randomly.

Pair Corralation between IShares Expanded and MicroSectors FANG

Considering the 90-day investment horizon iShares Expanded Tech is expected to generate 0.86 times more return on investment than MicroSectors FANG. However, iShares Expanded Tech is 1.16 times less risky than MicroSectors FANG. It trades about 0.25 of its potential returns per unit of risk. MicroSectors FANG ETN is currently generating about 0.19 per unit of risk. If you would invest  10,348  in iShares Expanded Tech on May 16, 2025 and sell it today you would earn a total of  1,512  from holding iShares Expanded Tech or generate 14.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

iShares Expanded Tech  vs.  MicroSectors FANG ETN

iShares Expanded Tech

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Expanded Tech are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, IShares Expanded displayed solid returns over the last few months and may actually be approaching a breakup point.

MicroSectors FANG ETN

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MicroSectors FANG ETN are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, MicroSectors FANG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Expanded and MicroSectors FANG

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

The idea behind iShares Expanded Tech and MicroSectors FANG ETN 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.