Correlation Between Taiwan Weighted and Fubon NASDAQ
Can any of the company-specific risk be diversified away by investing in both Taiwan Weighted 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 Taiwan Weighted and Fubon NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taiwan Weighted and Fubon NASDAQ 100 2X, you can compare the effects of market volatilities on Taiwan Weighted 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 Taiwan Weighted with a short position of Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Weighted and Fubon NASDAQ.
Diversification Opportunities for Taiwan Weighted and Fubon NASDAQ
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taiwan and Fubon is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Weighted 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 Taiwan Weighted 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 Taiwan Weighted 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 Taiwan Weighted i.e., Taiwan Weighted and Fubon NASDAQ go up and down completely randomly.
Pair Corralation between Taiwan Weighted and Fubon NASDAQ
Assuming the 90 days trading horizon Taiwan Weighted is expected to generate 4.23 times less return on investment than Fubon NASDAQ. But when comparing it to its historical volatility, Taiwan Weighted is 1.92 times less risky than Fubon NASDAQ. It trades about 0.05 of its potential returns per unit of risk. Fubon NASDAQ 100 2X is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 12,225 in Fubon NASDAQ 100 2X on September 4, 2024 and sell it today you would earn a total of 1,050 from holding Fubon NASDAQ 100 2X or generate 8.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taiwan Weighted vs. Fubon NASDAQ 100 2X
Performance |
| Timeline |
Taiwan Weighted and Fubon NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Fubon NASDAQ 100 2X
Pair trading matchups for Fubon NASDAQ
Pair Trading with Taiwan Weighted and Fubon NASDAQ
The main advantage of trading using opposite Taiwan Weighted and Fubon NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taiwan Weighted 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.| Taiwan Weighted vs. U Ming Marine Transport | Taiwan Weighted vs. Tainet Communication System | Taiwan Weighted vs. Grand Ocean Retail | Taiwan Weighted vs. Newretail Co |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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