Correlation Between Fubon NASDAQ and Fubon MSCI
Can any of the company-specific risk be diversified away by investing in both Fubon NASDAQ and Fubon MSCI 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 Fubon MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon NASDAQ 100 1X and Fubon MSCI Taiwan, you can compare the effects of market volatilities on Fubon NASDAQ and Fubon MSCI 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 Fubon MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon NASDAQ and Fubon MSCI.
Diversification Opportunities for Fubon NASDAQ and Fubon MSCI
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fubon and Fubon is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fubon NASDAQ 100 1X and Fubon MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon MSCI Taiwan 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 1X are associated (or correlated) with Fubon MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon MSCI Taiwan has no effect on the direction of Fubon NASDAQ i.e., Fubon NASDAQ and Fubon MSCI go up and down completely randomly.
Pair Corralation between Fubon NASDAQ and Fubon MSCI
Assuming the 90 days trading horizon Fubon NASDAQ 100 1X is expected to generate 1.07 times more return on investment than Fubon MSCI. However, Fubon NASDAQ is 1.07 times more volatile than Fubon MSCI Taiwan. It trades about -0.07 of its potential returns per unit of risk. Fubon MSCI Taiwan is currently generating about -0.15 per unit of risk. If you would invest 364.00 in Fubon NASDAQ 100 1X on August 24, 2024 and sell it today you would lose (7.00) from holding Fubon NASDAQ 100 1X or give up 1.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon NASDAQ 100 1X vs. Fubon MSCI Taiwan
Performance |
| Timeline |
| Fubon NASDAQ 100 |
| Fubon MSCI Taiwan |
Fubon NASDAQ and Fubon MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon NASDAQ and Fubon MSCI
The main advantage of trading using opposite Fubon NASDAQ and Fubon MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon NASDAQ position performs unexpectedly, Fubon MSCI 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 Fubon MSCI will offset losses from the drop in Fubon MSCI's long position.| Fubon NASDAQ vs. Fubon Hang Seng | Fubon NASDAQ vs. Fubon SP Preferred | Fubon NASDAQ vs. Fubon TWSE Corporate | Fubon NASDAQ vs. Fubon Dow Jones |
| Fubon MSCI vs. Fubon Hang Seng | Fubon MSCI vs. Fubon SP Preferred | Fubon MSCI vs. Fubon NASDAQ 100 1X | Fubon MSCI vs. Fubon TWSE Corporate |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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