Correlation Between Dow Jones and Fubon SSE180
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Fubon SSE180 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 Dow Jones and Fubon SSE180 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Fubon SSE180 Leveraged, you can compare the effects of market volatilities on Dow Jones and Fubon SSE180 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 Dow Jones with a short position of Fubon SSE180. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Fubon SSE180.
Diversification Opportunities for Dow Jones and Fubon SSE180
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and Fubon is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Fubon SSE180 Leveraged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon SSE180 Leveraged and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Fubon SSE180. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon SSE180 Leveraged has no effect on the direction of Dow Jones i.e., Dow Jones and Fubon SSE180 go up and down completely randomly.
Pair Corralation between Dow Jones and Fubon SSE180
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.44 times more return on investment than Fubon SSE180. However, Dow Jones Industrial is 2.27 times less risky than Fubon SSE180. It trades about 0.37 of its potential returns per unit of risk. Fubon SSE180 Leveraged is currently generating about 0.02 per unit of risk. If you would invest 4,176,346 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 314,719 from holding Dow Jones Industrial or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Dow Jones Industrial vs. Fubon SSE180 Leveraged
Performance |
| Timeline |
Dow Jones and Fubon SSE180 Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Fubon SSE180 Leveraged
Pair trading matchups for Fubon SSE180
Pair Trading with Dow Jones and Fubon SSE180
The main advantage of trading using opposite Dow Jones and Fubon SSE180 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Fubon SSE180 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 SSE180 will offset losses from the drop in Fubon SSE180's long position.| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
| Fubon SSE180 vs. Fubon Hang Seng | Fubon SSE180 vs. Fubon SP Preferred | Fubon SSE180 vs. Fubon NASDAQ 100 1X | Fubon SSE180 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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