Correlation Between MicroSectors FANG and FT Cboe

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

Diversification Opportunities for MicroSectors FANG and FT Cboe

-0.96

Correlation Coefficient

MicroSectors FANG  FT Cboe

Pay attention - limited upside

The 3 months correlation between MicroSectors and BUFD is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 FT Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and FT Cboe go up and down completely randomly.

Pair Corralation between MicroSectors FANG and FT Cboe

Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the FT Cboe. In addition to that, MicroSectors FANG is 12.67 times more volatile than FT Cboe Vest. It trades about -0.1 of its total potential returns per unit of risk. FT Cboe Vest is currently generating about 0.16 per unit of volatility. If you would invest  2,701  in FT Cboe Vest on August 11, 2025 and sell it today you would earn a total of  72.00  from holding FT Cboe Vest or generate 2.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

MicroSectors FANG Index  vs.  FT Cboe Vest

MicroSectors FANG Index

Risk-Adjusted Performance

Weakest

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 conflicting performance in the last few months, the Etf's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

FT Cboe Vest

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MicroSectors FANG and FT Cboe

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

The idea behind MicroSectors FANG Index and FT Cboe Vest 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.