Correlation Between Fubon MSCI and Taiwan Weighted
Can any of the company-specific risk be diversified away by investing in both Fubon MSCI and Taiwan Weighted 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 Taiwan Weighted 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 Taiwan Weighted, you can compare the effects of market volatilities on Fubon MSCI and Taiwan Weighted 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 Taiwan Weighted. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Taiwan Weighted.
Diversification Opportunities for Fubon MSCI and Taiwan Weighted
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fubon and Taiwan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Taiwan Weighted in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Weighted 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 Taiwan Weighted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Weighted has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Taiwan Weighted go up and down completely randomly.
Pair Corralation between Fubon MSCI and Taiwan Weighted
Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to generate 1.23 times more return on investment than Taiwan Weighted. However, Fubon MSCI is 1.23 times more volatile than Taiwan Weighted. It trades about 0.06 of its potential returns per unit of risk. Taiwan Weighted is currently generating about 0.02 per unit of risk. If you would invest 13,450 in Fubon MSCI Taiwan on August 30, 2024 and sell it today you would earn a total of 365.00 from holding Fubon MSCI Taiwan or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 93.02% |
| Values | Daily Returns |
Fubon MSCI Taiwan vs. Taiwan Weighted
Performance |
| Timeline |
Fubon MSCI and Taiwan Weighted Volatility Contrast
Predicted Return Density |
| Returns |
Fubon MSCI Taiwan
Pair trading matchups for Fubon MSCI
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Pair Trading with Fubon MSCI and Taiwan Weighted
The main advantage of trading using opposite Fubon MSCI and Taiwan Weighted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon MSCI position performs unexpectedly, Taiwan Weighted 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 Taiwan Weighted will offset losses from the drop in Taiwan Weighted's long position.| Fubon MSCI vs. Yuanta Daily Taiwan | Fubon MSCI vs. Symtek Automation Asia | Fubon MSCI vs. CTCI Corp | Fubon MSCI vs. Information Technology Total |
| Taiwan Weighted vs. Energenesis Biomedical Co | Taiwan Weighted vs. Jia Jie Biomedical | Taiwan Weighted vs. Level Biotechnology | Taiwan Weighted vs. Medigen Biotechnology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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