Correlation Between Fubon FTSE and Paradigm
Can any of the company-specific risk be diversified away by investing in both Fubon FTSE and Paradigm 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 FTSE and Paradigm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fubon FTSE Vietnam and Paradigm SP GSCI, you can compare the effects of market volatilities on Fubon FTSE and Paradigm 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 FTSE with a short position of Paradigm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon FTSE and Paradigm.
Diversification Opportunities for Fubon FTSE and Paradigm
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fubon and Paradigm is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fubon FTSE Vietnam and Paradigm SP GSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paradigm SP GSCI and Fubon FTSE 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 FTSE Vietnam are associated (or correlated) with Paradigm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paradigm SP GSCI has no effect on the direction of Fubon FTSE i.e., Fubon FTSE and Paradigm go up and down completely randomly.
Pair Corralation between Fubon FTSE and Paradigm
Assuming the 90 days trading horizon Fubon FTSE Vietnam is expected to under-perform the Paradigm. But the etf apears to be less risky and, when comparing its historical volatility, Fubon FTSE Vietnam is 3.57 times less risky than Paradigm. The etf trades about 0.0 of its potential returns per unit of risk. The Paradigm SP GSCI is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,303 in Paradigm SP GSCI on September 4, 2024 and sell it today you would lose (19.00) from holding Paradigm SP GSCI or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fubon FTSE Vietnam vs. Paradigm SP GSCI
Performance |
| Timeline |
| Fubon FTSE Vietnam |
| Paradigm SP GSCI |
Fubon FTSE and Paradigm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fubon FTSE and Paradigm
The main advantage of trading using opposite Fubon FTSE and Paradigm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon FTSE position performs unexpectedly, Paradigm 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 Paradigm will offset losses from the drop in Paradigm's long position.The idea behind Fubon FTSE Vietnam and Paradigm SP GSCI pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Paradigm vs. Paradigm SP GSCI | Paradigm vs. CTBC USD Corporate | Paradigm vs. Cathay TIP TAIEX | Paradigm vs. Yuanta Daily SP |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |