Correlation Between Dow Jones and Matthews Asia
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Matthews Asia 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 Asia 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 Asia Innovators, you can compare the effects of market volatilities on Dow Jones and Matthews Asia 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 Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Matthews Asia.
Diversification Opportunities for Dow Jones and Matthews Asia
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and Matthews is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Matthews Asia Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Innovators 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 Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Innovators has no effect on the direction of Dow Jones i.e., Dow Jones and Matthews Asia go up and down completely randomly.
Pair Corralation between Dow Jones and Matthews Asia
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.55 times more return on investment than Matthews Asia. However, Dow Jones Industrial is 1.81 times less risky than Matthews Asia. It trades about 0.18 of its potential returns per unit of risk. Matthews Asia Innovators is currently generating about 0.07 per unit of risk. If you would invest 4,109,142 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 364,515 from holding Dow Jones Industrial or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Matthews Asia Innovators
Performance |
| Timeline |
Dow Jones and Matthews Asia Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Matthews Asia Innovators
Pair trading matchups for Matthews Asia
Pair Trading with Dow Jones and Matthews Asia
The main advantage of trading using opposite Dow Jones and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Matthews Asia 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 Asia will offset losses from the drop in Matthews Asia's long position.| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
| Matthews Asia vs. Matthews China Active | Matthews Asia vs. MAYBANK EMERGING ETF | Matthews Asia vs. Matthews Emerging Markets | Matthews Asia vs. JP Morgan Exchange Traded |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Transaction History View history of all your transactions and understand their impact on performance |