Correlation Between Fubon MSCI and Inventec Corp
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Inventec Corp 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 Inventec Corp 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 Inventec Corp, you can compare the effects of market volatilities on Fubon MSCI and Inventec Corp 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 Inventec Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Inventec Corp.
Diversification Opportunities for Fubon MSCI and Inventec Corp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fubon and Inventec is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Inventec Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventec Corp 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 Inventec Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventec Corp has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Inventec Corp go up and down completely randomly.
Pair Corralation between Fubon MSCI and Inventec Corp
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the Inventec Corp. But the etf apears to be less risky and, when comparing its historical volatility, Fubon MSCI Taiwan is 2.7 times less risky than Inventec Corp. The etf trades about -0.11 of its potential returns per unit of risk. The Inventec Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,540 in Inventec Corp on September 1, 2024 and sell it today you would earn a total of 360.00 from holding Inventec Corp or generate 7.93% 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. Inventec Corp
Performance |
| Timeline |
| Fubon MSCI Taiwan |
| Inventec Corp |
Fubon MSCI and Inventec Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon MSCI and Inventec Corp
The main advantage of trading using opposite Fubon MSCI and Inventec Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Inventec Corp 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 Inventec Corp will offset losses from the drop in Inventec Corp's long position.| Fubon MSCI vs. Yuanta Daily Taiwan | Fubon MSCI vs. Cathay Taiwan 5G | Fubon MSCI vs. Yuanta Daily CSI | Fubon MSCI vs. Fubon FTSE Vietnam |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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