Correlation Between Fubon SP and Fubon NASDAQ
Can any of the company-specific risk be diversified away by investing in both Fubon SP and Fubon NASDAQ 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 SP and Fubon NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon SP Preferred and Fubon NASDAQ 100 2X, you can compare the effects of market volatilities on Fubon SP and Fubon NASDAQ 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 SP with a short position of Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon SP and Fubon NASDAQ.
Diversification Opportunities for Fubon SP and Fubon NASDAQ
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fubon and Fubon is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fubon SP Preferred and Fubon NASDAQ 100 2X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon NASDAQ 100 and Fubon SP 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 SP Preferred are associated (or correlated) with Fubon NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon NASDAQ 100 has no effect on the direction of Fubon SP i.e., Fubon SP and Fubon NASDAQ go up and down completely randomly.
Pair Corralation between Fubon SP and Fubon NASDAQ
Assuming the 90 days trading horizon Fubon SP is expected to generate 3.27 times less return on investment than Fubon NASDAQ. But when comparing it to its historical volatility, Fubon SP Preferred is 2.91 times less risky than Fubon NASDAQ. It trades about 0.18 of its potential returns per unit of risk. Fubon NASDAQ 100 2X is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 12,440 in Fubon NASDAQ 100 2X on September 3, 2024 and sell it today you would earn a total of 885.00 from holding Fubon NASDAQ 100 2X or generate 7.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon SP Preferred vs. Fubon NASDAQ 100 2X
Performance |
| Timeline |
| Fubon SP Preferred |
| Fubon NASDAQ 100 |
Fubon SP and Fubon NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon SP and Fubon NASDAQ
The main advantage of trading using opposite Fubon SP and Fubon NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon SP position performs unexpectedly, Fubon NASDAQ 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 NASDAQ will offset losses from the drop in Fubon NASDAQ's long position.| Fubon SP vs. Cathay Taiwan 5G | Fubon SP vs. Ruentex Development Co | Fubon SP vs. Symtek Automation Asia | Fubon SP vs. CTCI Corp |
| 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 |
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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