Correlation Between Fubon Financial and Lincoln National

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

By analyzing existing cross correlation between Fubon Financial Holding and Lincoln National, you can compare the effects of market volatilities on Fubon Financial and Lincoln National 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 Financial with a short position of Lincoln National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fubon Financial and Lincoln National.

Diversification Opportunities for Fubon Financial and Lincoln National

0.0

Correlation Coefficient

Fubon Financial  Lincoln National

Pay attention - limited upside

The 3 months correlation between Fubon and Lincoln is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fubon Financial Holding and Lincoln National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lincoln National and Fubon Financial 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 Financial Holding are associated (or correlated) with Lincoln National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lincoln National has no effect on the direction of Fubon Financial i.e., Fubon Financial and Lincoln National go up and down completely randomly.

Pair Corralation between Fubon Financial and Lincoln National

If you would invest  3,104  in Lincoln National on December 28, 2024 and sell it today you would earn a total of  464.00  from holding Lincoln National or generate 14.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Fubon Financial Holding  vs.  Lincoln National

Fubon Financial Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fubon Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fubon Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lincoln National

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lincoln National are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Lincoln National exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fubon Financial and Lincoln National

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

The idea behind Fubon Financial Holding and Lincoln National 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 Stocks Directory module to find actively traded stocks across global markets.