Correlation Between High-yield Municipal and Matthews China
Can any of the company-specific risk be diversified away by investing in both High-yield Municipal and Matthews China 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 High-yield Municipal and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Matthews China Fund, you can compare the effects of market volatilities on High-yield Municipal and Matthews China 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 High-yield Municipal with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Municipal and Matthews China.
Diversification Opportunities for High-yield Municipal and Matthews China
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High-yield and Matthews is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Matthews China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China and High-yield Municipal 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 High Yield Municipal Fund are associated (or correlated) with Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China has no effect on the direction of High-yield Municipal i.e., High-yield Municipal and Matthews China go up and down completely randomly.
Pair Corralation between High-yield Municipal and Matthews China
Assuming the 90 days horizon High-yield Municipal is expected to generate 11.93 times less return on investment than Matthews China. But when comparing it to its historical volatility, High Yield Municipal Fund is 6.16 times less risky than Matthews China. It trades about 0.13 of its potential returns per unit of risk. Matthews China Fund is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,362 in Matthews China Fund on November 27, 2024 and sell it today you would earn a total of 112.00 from holding Matthews China Fund or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Matthews China Fund
Performance |
| Timeline |
| High Yield Municipal |
| Matthews China |
High-yield Municipal and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High-yield Municipal and Matthews China
The main advantage of trading using opposite High-yield Municipal and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Municipal position performs unexpectedly, Matthews China 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 Matthews China will offset losses from the drop in Matthews China's long position.| High-yield Municipal vs. High Yield Fund Investor | High-yield Municipal vs. Intermediate Term Tax Free Bond | High-yield Municipal vs. California High Yield Municipal | High-yield Municipal vs. T Rowe Price |
| Matthews China vs. Matthews Pacific Tiger | Matthews China vs. Matthews India Fund | Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews Asia Growth |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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