Correlation Between New Perspective and Matthews Pacific
Can any of the company-specific risk be diversified away by investing in both New Perspective and Matthews Pacific 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 New Perspective and Matthews Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Matthews Pacific Tiger, you can compare the effects of market volatilities on New Perspective and Matthews Pacific 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 New Perspective with a short position of Matthews Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Matthews Pacific.
Diversification Opportunities for New Perspective and Matthews Pacific
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Matthews is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Matthews Pacific Tiger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Pacific Tiger and New Perspective 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 New Perspective Fund are associated (or correlated) with Matthews Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Pacific Tiger has no effect on the direction of New Perspective i.e., New Perspective and Matthews Pacific go up and down completely randomly.
Pair Corralation between New Perspective and Matthews Pacific
Assuming the 90 days horizon New Perspective Fund is expected to generate 0.83 times more return on investment than Matthews Pacific. However, New Perspective Fund is 1.2 times less risky than Matthews Pacific. It trades about -0.01 of its potential returns per unit of risk. Matthews Pacific Tiger is currently generating about -0.15 per unit of risk. If you would invest 6,504 in New Perspective Fund on October 24, 2024 and sell it today you would lose (71.00) from holding New Perspective Fund or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Matthews Pacific Tiger
Performance |
| Timeline |
| New Perspective |
| Matthews Pacific Tiger |
New Perspective and Matthews Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Matthews Pacific
The main advantage of trading using opposite New Perspective and Matthews Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Matthews Pacific 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 Pacific will offset losses from the drop in Matthews Pacific's long position.| New Perspective vs. Growth Fund Of | New Perspective vs. American Funds Fundamental | New Perspective vs. Investment Of America | New Perspective vs. Smallcap World Fund |
| Matthews Pacific vs. Matthews Asian Growth | Matthews Pacific vs. Matthews China Fund | Matthews Pacific vs. Matthews India Fund | Matthews Pacific 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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