Correlation Between Dow Jones and Matthews Asian
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Matthews Asian 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 Dow Jones and Matthews Asian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Matthews Asian Growth, you can compare the effects of market volatilities on Dow Jones and Matthews Asian 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 Dow Jones with a short position of Matthews Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Matthews Asian.
Diversification Opportunities for Dow Jones and Matthews Asian
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dow and Matthews is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Matthews Asian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asian Growth and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Matthews Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asian Growth has no effect on the direction of Dow Jones i.e., Dow Jones and Matthews Asian go up and down completely randomly.
Pair Corralation between Dow Jones and Matthews Asian
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.27 times more return on investment than Matthews Asian. However, Dow Jones is 1.27 times more volatile than Matthews Asian Growth. It trades about 0.17 of its potential returns per unit of risk. Matthews Asian Growth is currently generating about -0.09 per unit of risk. If you would invest 4,290,695 in Dow Jones Industrial on October 24, 2024 and sell it today you would earn a total of 111,886 from holding Dow Jones Industrial or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Dow Jones Industrial vs. Matthews Asian Growth
Performance |
| Timeline |
Dow Jones and Matthews Asian Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Matthews Asian Growth
Pair trading matchups for Matthews Asian
Pair Trading with Dow Jones and Matthews Asian
The main advantage of trading using opposite Dow Jones and Matthews Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Matthews Asian 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 Asian will offset losses from the drop in Matthews Asian's long position.| Dow Jones vs. Transocean | Dow Jones vs. Noble plc | Dow Jones vs. Evolution Gaming Group | Dow Jones vs. Addus HomeCare |
| Matthews Asian vs. Matthews Pacific Tiger | Matthews Asian vs. Matthews China Fund | Matthews Asian vs. Matthews Asia Dividend | Matthews Asian 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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