Correlation Between Amazon and Fubon NASDAQ
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Fubon NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Fubon NASDAQ 100 2X, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Fubon NASDAQ.
Diversification Opportunities for Amazon and Fubon NASDAQ
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amazon and Fubon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc 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 Amazon 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 Amazon Inc 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 Amazon i.e., Amazon and Fubon NASDAQ go up and down completely randomly.
Pair Corralation between Amazon and Fubon NASDAQ
Given the investment horizon of 90 days Amazon is expected to generate 1.07 times less return on investment than Fubon NASDAQ. In addition to that, Amazon is 1.13 times more volatile than Fubon NASDAQ 100 2X. It trades about 0.16 of its total potential returns per unit of risk. Fubon NASDAQ 100 2X is currently generating about 0.2 per unit of volatility. 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 | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Amazon Inc vs. Fubon NASDAQ 100 2X
Performance |
| Timeline |
| Amazon Inc |
| Fubon NASDAQ 100 |
Amazon and Fubon NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Fubon NASDAQ
The main advantage of trading using opposite Amazon and Fubon NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.The idea behind Amazon Inc and Fubon NASDAQ 100 2X 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.| 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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