This module allows you to analyze existing cross correlation between Taiwan Wtd and DOW. You can compare the effects of market volatilities on Taiwan Wtd and 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 Taiwan Wtd with a short position of DOW. See also your portfolio center. Please also check ongoing floating volatility patterns of Taiwan Wtd and DOW.
Assuming 30 trading days horizon, Taiwan Wtd is expected to under-perform the DOW. In addition to that, Taiwan Wtd is 1.06 times more volatile than DOW. It trades about 0.0 of its total potential returns per unit of risk. DOW is currently generating about 0.15 per unit of volatility. If you would invest 2,446,170 in DOW on June 21, 2018 and sell it today you would earn a total of 59,642 from holding DOW or generate 2.44% return on investment over 30 days.
Overlapping area represents the amount of risk that can be diversified away by holding Taiwan Wtd and DOW in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on DOW and Taiwan Wtd 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 Taiwan Wtd are associated (or correlated) with DOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOW has no effect on the direction of Taiwan Wtd i.e. Taiwan Wtd and DOW go up and down completely randomly.
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