Correlation Between Fubon MSCI and Cathay Nikkei
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Cathay Nikkei 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 Fubon MSCI and Cathay Nikkei into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon MSCI Taiwan and Cathay Nikkei 225, you can compare the effects of market volatilities on Fubon MSCI and Cathay Nikkei 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 Fubon MSCI with a short position of Cathay Nikkei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Cathay Nikkei.
Diversification Opportunities for Fubon MSCI and Cathay Nikkei
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Cathay is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Cathay Nikkei 225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Nikkei 225 and Fubon MSCI 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 Fubon MSCI Taiwan are associated (or correlated) with Cathay Nikkei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Nikkei 225 has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Cathay Nikkei go up and down completely randomly.
Pair Corralation between Fubon MSCI and Cathay Nikkei
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 1.12 times more return on investment than Cathay Nikkei. However, Fubon MSCI is 1.12 times more volatile than Cathay Nikkei 225. It trades about 0.05 of its potential returns per unit of risk. Cathay Nikkei 225 is currently generating about 0.0 per unit of risk. If you would invest 12,440 in Fubon MSCI Taiwan on September 3, 2024 and sell it today you would earn a total of 1,325 from holding Fubon MSCI Taiwan or generate 10.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Cathay Nikkei 225
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Cathay Nikkei 225 |
Fubon MSCI and Cathay Nikkei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Cathay Nikkei
The main advantage of trading using opposite Fubon MSCI and Cathay Nikkei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Cathay Nikkei 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 Cathay Nikkei will offset losses from the drop in Cathay Nikkei's long position.| Fubon MSCI vs. Cathay Taiwan 5G | Fubon MSCI vs. Ruentex Development Co | Fubon MSCI vs. Symtek Automation Asia | Fubon MSCI vs. CTCI Corp |
| Cathay Nikkei vs. Cathay TIP TAIEX | Cathay Nikkei vs. Cathay Nasdaq AI | Cathay Nikkei vs. Cathay Dow Jones | Cathay Nikkei vs. Cathay Bloomberg Barclays |
Check out your portfolio center.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.
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