Correlation Between Vanguard Total and Matthews International
Can any of the company-specific risk be diversified away by investing in both Vanguard Total and Matthews International 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 Vanguard Total and Matthews International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Total Bond and Matthews International Funds, you can compare the effects of market volatilities on Vanguard Total and Matthews International 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 Vanguard Total with a short position of Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Total and Matthews International.
Diversification Opportunities for Vanguard Total and Matthews International
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Matthews is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total Bond and Matthews International Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and Vanguard Total 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 Vanguard Total Bond are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of Vanguard Total i.e., Vanguard Total and Matthews International go up and down completely randomly.
Pair Corralation between Vanguard Total and Matthews International
Considering the 90-day investment horizon Vanguard Total Bond is expected to generate 0.35 times more return on investment than Matthews International. However, Vanguard Total Bond is 2.87 times less risky than Matthews International. It trades about 0.03 of its potential returns per unit of risk. Matthews International Funds is currently generating about -0.01 per unit of risk. If you would invest 6,841 in Vanguard Total Bond on August 25, 2024 and sell it today you would earn a total of 418.00 from holding Vanguard Total Bond or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 69.82% |
| Values | Daily Returns |
Vanguard Total Bond vs. Matthews International Funds
Performance |
| Timeline |
| Vanguard Total Bond |
| Matthews International |
Vanguard Total and Matthews International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Total and Matthews International
The main advantage of trading using opposite Vanguard Total and Matthews International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Total position performs unexpectedly, Matthews International 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 International will offset losses from the drop in Matthews International's long position.| Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total International | Vanguard Total vs. Vanguard Total Stock | Vanguard Total vs. Vanguard Real Estate |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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