Correlation Between Visa and Fubon NASDAQ
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and Fubon NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Fubon NASDAQ 100 2X, you can compare the effects of market volatilities on Visa 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 Visa with a short position of Fubon NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Fubon NASDAQ.
Diversification Opportunities for Visa and Fubon NASDAQ
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Visa and Fubon is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and Fubon NASDAQ go up and down completely randomly.
Pair Corralation between Visa and Fubon NASDAQ
Taking into account the 90-day investment horizon Visa is expected to generate 1.94 times less return on investment than Fubon NASDAQ. But when comparing it to its historical volatility, Visa Class A is 2.18 times less risky than Fubon NASDAQ. It trades about 0.09 of its potential returns per unit of risk. Fubon NASDAQ 100 2X is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,100 in Fubon NASDAQ 100 2X on September 4, 2024 and sell it today you would earn a total of 4,175 from holding Fubon NASDAQ 100 2X or generate 45.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.97% |
| Values | Daily Returns |
Visa Class A vs. Fubon NASDAQ 100 2X
Performance |
| Timeline |
| Visa Class A |
| Fubon NASDAQ 100 |
Visa and Fubon NASDAQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Fubon NASDAQ
The main advantage of trading using opposite Visa and Fubon NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
| 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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