Correlation Between First Trust and Matthews China
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and Matthews China Discovery, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Matthews China.
Diversification Opportunities for First Trust and Matthews China
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Matthews is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded and Matthews China Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Discovery and First Trust 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 First Trust Exchange Traded 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 Discovery has no effect on the direction of First Trust i.e., First Trust and Matthews China go up and down completely randomly.
Pair Corralation between First Trust and Matthews China
Given the investment horizon of 90 days First Trust Exchange Traded is expected to generate 0.09 times more return on investment than Matthews China. However, First Trust Exchange Traded is 10.85 times less risky than Matthews China. It trades about 0.46 of its potential returns per unit of risk. Matthews China Discovery is currently generating about -0.04 per unit of risk. If you would invest 3,824 in First Trust Exchange Traded on September 1, 2024 and sell it today you would earn a total of 66.00 from holding First Trust Exchange Traded or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. Matthews China Discovery
Performance |
| Timeline |
| First Trust Exchange |
| Matthews China Discovery |
First Trust and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Matthews China
The main advantage of trading using opposite First Trust and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Exchange Traded | First Trust vs. FT Cboe Vest | First Trust vs. FT Cboe Vest |
| Matthews China vs. FT Vest Equity | Matthews China vs. Northern Lights | Matthews China vs. Dimensional International High | Matthews China vs. Davis Select International |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |