Correlation Between IShares MSCI and Matthews China
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 IShares MSCI and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Taiwan and Matthews China Active, you can compare the effects of market volatilities on IShares MSCI 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 IShares MSCI with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Matthews China.
Diversification Opportunities for IShares MSCI and Matthews China
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Matthews is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Taiwan and Matthews China Active in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Active and IShares MSCI 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 iShares MSCI Taiwan 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 Active has no effect on the direction of IShares MSCI i.e., IShares MSCI and Matthews China go up and down completely randomly.
Pair Corralation between IShares MSCI and Matthews China
Considering the 90-day investment horizon iShares MSCI Taiwan is expected to generate 0.61 times more return on investment than Matthews China. However, iShares MSCI Taiwan is 1.63 times less risky than Matthews China. It trades about 0.06 of its potential returns per unit of risk. Matthews China Active is currently generating about 0.02 per unit of risk. If you would invest 4,182 in iShares MSCI Taiwan on August 28, 2024 and sell it today you would earn a total of 1,224 from holding iShares MSCI Taiwan or generate 29.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Taiwan vs. Matthews China Active
Performance |
| Timeline |
| iShares MSCI Taiwan |
| Matthews China Active |
IShares MSCI and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Matthews China
The main advantage of trading using opposite IShares MSCI and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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.| IShares MSCI vs. iShares MSCI South | IShares MSCI vs. iShares MSCI Hong | IShares MSCI vs. iShares MSCI Singapore | IShares MSCI vs. iShares MSCI Malaysia |
| Matthews China vs. iShares MSCI Singapore | Matthews China vs. iShares MSCI Malaysia | Matthews China vs. iShares MSCI Australia | Matthews China vs. iShares MSCI South |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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