Correlation Between Empire State and Matthews China
Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Matthews China Small, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Matthews China.
Diversification Opportunities for Empire State and Matthews China
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Matthews is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Matthews China Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Small and Empire State 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 Empire State Realty 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 Small has no effect on the direction of Empire State i.e., Empire State and Matthews China go up and down completely randomly.
Pair Corralation between Empire State and Matthews China
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.01 times more return on investment than Matthews China. However, Empire State is 1.01 times more volatile than Matthews China Small. It trades about -0.23 of its potential returns per unit of risk. Matthews China Small is currently generating about -0.24 per unit of risk. If you would invest 821.00 in Empire State Realty on January 14, 2025 and sell it today you would lose (107.00) from holding Empire State Realty or give up 13.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. Matthews China Small
Performance |
| Timeline |
| Empire State Realty |
| Matthews China Small |
Empire State and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Matthews China
The main advantage of trading using opposite Empire State and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews Asia Innovators | Matthews China vs. Matthews Asia Small | Matthews China vs. Matthews China Fund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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