This module allows you to analyze existing cross correlation between NIKKEI 225 and Taiwan Wtd. You can compare the effects of market volatilities on NIKKEI 225 and Taiwan Wtd 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 NIKKEI 225 with a short position of Taiwan Wtd. See also your portfolio center
. Please also check ongoing floating volatility patterns of NIKKEI 225
and Taiwan Wtd
NIKKEI 225 vs. Taiwan Wtd
Assuming 30 trading days horizon, NIKKEI 225 is expected to generate 1.47 times more return on investment than Taiwan Wtd. However, NIKKEI 225 is 1.47 times more volatile than Taiwan Wtd. It trades about 0.02 of its potential returns per unit of risk. Taiwan Wtd is currently generating about -0.07 per unit of risk. If you would invest 2,268,033 in NIKKEI 225 on June 17, 2018 and sell it today you would earn a total of 8,922 from holding NIKKEI 225 or generate 0.39% return on investment over 30 days.
Pair Corralation between NIKKEI 225 and Taiwan Wtd
|Time Period||1 Month [change]|
Very poor diversification
Overlapping area represents the amount of risk that can be diversified away by holding NIKKEI 225 and Taiwan Wtd in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Wtd and NIKKEI 225 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 NIKKEI 225 are associated (or correlated) with Taiwan Wtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Wtd has no effect on the direction of NIKKEI 225 i.e. NIKKEI 225 and Taiwan Wtd go up and down completely randomly.
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