Correlation Between Baron Global and Matthews China
Can any of the company-specific risk be diversified away by investing in both Baron Global 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 Baron Global and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Global Advantage and Matthews China Dividend, you can compare the effects of market volatilities on Baron Global 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 Baron Global with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Global and Matthews China.
Diversification Opportunities for Baron Global and Matthews China
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Baron and Matthews is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Baron Global Advantage and Matthews China Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Dividend and Baron Global 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 Baron Global Advantage 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 Dividend has no effect on the direction of Baron Global i.e., Baron Global and Matthews China go up and down completely randomly.
Pair Corralation between Baron Global and Matthews China
Assuming the 90 days horizon Baron Global Advantage is expected to generate 1.07 times more return on investment than Matthews China. However, Baron Global is 1.07 times more volatile than Matthews China Dividend. It trades about 0.06 of its potential returns per unit of risk. Matthews China Dividend is currently generating about -0.01 per unit of risk. If you would invest 2,607 in Baron Global Advantage on August 26, 2024 and sell it today you would earn a total of 1,219 from holding Baron Global Advantage or generate 46.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Global Advantage vs. Matthews China Dividend
Performance |
| Timeline |
| Baron Global Advantage |
| Matthews China Dividend |
Baron Global and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Global and Matthews China
The main advantage of trading using opposite Baron Global and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Global 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.| Baron Global vs. Baron Opportunity Fund | Baron Global vs. Morgan Stanley Multi | Baron Global vs. Baron Focused Growth | Baron Global vs. Mid Cap Growth |
| Matthews China vs. Matthews China Small | Matthews China vs. Matthews Asia Dividend | Matthews China vs. Matthews Asia Small | 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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