Correlation Between Fubon NASDAQ and Fubon Dow

Can any of the company-specific risk be diversified away by investing in both Fubon NASDAQ and Fubon Dow 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 NASDAQ and Fubon Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fubon NASDAQ 100 1X and Fubon Dow Jones, you can compare the effects of market volatilities on Fubon NASDAQ and Fubon Dow 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 NASDAQ with a short position of Fubon Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon NASDAQ and Fubon Dow.

Diversification Opportunities for Fubon NASDAQ and Fubon Dow

0.41

Correlation Coefficient

Fubon NASDAQ  Fubon Dow

Very weak diversification

The 3 months correlation between Fubon and Fubon is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fubon NASDAQ 100 1X and Fubon Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fubon Dow Jones and Fubon NASDAQ 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 NASDAQ 100 1X are associated (or correlated) with Fubon Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fubon Dow Jones has no effect on the direction of Fubon NASDAQ i.e., Fubon NASDAQ and Fubon Dow go up and down completely randomly.

Pair Corralation between Fubon NASDAQ and Fubon Dow

Assuming the 90 days trading horizon Fubon NASDAQ 100 1X is expected to under-perform the Fubon Dow. But the etf apears to be less risky and, when comparing its historical volatility, Fubon NASDAQ 100 1X is 1.07 times less risky than Fubon Dow. The etf trades about -0.17 of its potential returns per unit of risk. The Fubon Dow Jones is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,237  in Fubon Dow Jones on September 4, 2024 and sell it today you would lose (13.00) from holding Fubon Dow Jones or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Fubon NASDAQ 100 1X  vs.  Fubon Dow Jones

Fubon NASDAQ 100

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fubon NASDAQ 100 1X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Etf's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Fubon Dow Jones

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fubon Dow Jones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fubon Dow is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Fubon NASDAQ and Fubon Dow

The main advantage of trading using opposite Fubon NASDAQ and Fubon Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fubon NASDAQ position performs unexpectedly, Fubon Dow 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 Dow will offset losses from the drop in Fubon Dow's long position.

The idea behind Fubon NASDAQ 100 1X and Fubon Dow Jones 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.