Correlation Between Fubon NASDAQ and YuantaP Shares
Can any of the company-specific risk be diversified away by investing in both Fubon NASDAQ and YuantaP Shares 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 NASDAQ and YuantaP Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon NASDAQ 100 2X and YuantaP shares MSCI Taiwan, you can compare the effects of market volatilities on Fubon NASDAQ and YuantaP Shares 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 NASDAQ with a short position of YuantaP Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon NASDAQ and YuantaP Shares.
Diversification Opportunities for Fubon NASDAQ and YuantaP Shares
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fubon and YuantaP is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fubon NASDAQ 100 2X and YuantaP shares MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YuantaP shares MSCI and Fubon NASDAQ 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 NASDAQ 100 2X are associated (or correlated) with YuantaP Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YuantaP shares MSCI has no effect on the direction of Fubon NASDAQ i.e., Fubon NASDAQ and YuantaP Shares go up and down completely randomly.
Pair Corralation between Fubon NASDAQ and YuantaP Shares
Assuming the 90 days trading horizon Fubon NASDAQ 100 2X is expected to generate 2.78 times more return on investment than YuantaP Shares. However, Fubon NASDAQ is 2.78 times more volatile than YuantaP shares MSCI Taiwan. It trades about 0.09 of its potential returns per unit of risk. YuantaP shares MSCI Taiwan is currently generating about 0.06 per unit of risk. If you would invest 5,595 in Fubon NASDAQ 100 2X on September 3, 2024 and sell it today you would earn a total of 7,730 from holding Fubon NASDAQ 100 2X or generate 138.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon NASDAQ 100 2X vs. YuantaP shares MSCI Taiwan
Performance |
| Timeline |
| Fubon NASDAQ 100 |
| YuantaP shares MSCI |
Fubon NASDAQ and YuantaP Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon NASDAQ and YuantaP Shares
The main advantage of trading using opposite Fubon NASDAQ and YuantaP Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon NASDAQ position performs unexpectedly, YuantaP Shares 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 YuantaP Shares will offset losses from the drop in YuantaP Shares' long position.| Fubon NASDAQ vs. Fubon Hang Seng | Fubon NASDAQ vs. Fubon SP Preferred | Fubon NASDAQ vs. Fubon NASDAQ 100 1X | Fubon NASDAQ vs. Fubon TWSE Corporate |
| YuantaP Shares vs. Yuanta Daily Taiwan | YuantaP Shares vs. Fubon NASDAQ 100 2X | YuantaP Shares vs. UPAMC NYSE FANG | YuantaP Shares vs. Cathay Koreataiwan IT |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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