Correlation Between Fubon MSCI and Carnival Industrial

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

By analyzing existing cross correlation between Fubon MSCI Taiwan and Carnival Industrial Corp, you can compare the effects of market volatilities on Fubon MSCI and Carnival Industrial 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 MSCI with a short position of Carnival Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon MSCI and Carnival Industrial.

Diversification Opportunities for Fubon MSCI and Carnival Industrial

-0.05

Correlation Coefficient

Fubon MSCI  Carnival Industrial

Good diversification

The 3 months correlation between Fubon and Carnival is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fubon MSCI Taiwan and Carnival Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Industrial Corp and Fubon MSCI 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 MSCI Taiwan are associated (or correlated) with Carnival Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Industrial Corp has no effect on the direction of Fubon MSCI i.e., Fubon MSCI and Carnival Industrial go up and down completely randomly.

Pair Corralation between Fubon MSCI and Carnival Industrial

Assuming the 90 days trading horizon Fubon MSCI Taiwan is expected to under-perform the Carnival Industrial. In addition to that, Fubon MSCI is 1.02 times more volatile than Carnival Industrial Corp. It trades about -0.1 of its total potential returns per unit of risk. Carnival Industrial Corp is currently generating about -0.06 per unit of volatility. If you would invest  982.00  in Carnival Industrial Corp on December 28, 2024 and sell it today you would lose (42.00) from holding Carnival Industrial Corp or give up 4.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fubon MSCI Taiwan  vs.  Carnival Industrial Corp

Fubon MSCI Taiwan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon MSCI Taiwan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Carnival Industrial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carnival Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Carnival Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fubon MSCI and Carnival Industrial

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

The idea behind Fubon MSCI Taiwan and Carnival Industrial Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.