Correlation Between Ford and Matthews Asia
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Matthews Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Matthews Asia Innovators, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Matthews Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Matthews Asia.
Diversification Opportunities for Ford and Matthews Asia
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Matthews is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor 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 Ford 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 Ford Motor 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 Ford i.e., Ford and Matthews Asia go up and down completely randomly.
Pair Corralation between Ford and Matthews Asia
Taking into account the 90-day investment horizon Ford is expected to generate 1.01 times less return on investment than Matthews Asia. In addition to that, Ford is 1.43 times more volatile than Matthews Asia Innovators. It trades about 0.05 of its total potential returns per unit of risk. Matthews Asia Innovators is currently generating about 0.07 per unit of volatility. If you would invest 2,661 in Matthews Asia Innovators on August 28, 2024 and sell it today you would earn a total of 145.00 from holding Matthews Asia Innovators or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Matthews Asia Innovators
Performance |
| Timeline |
| Ford Motor |
| Matthews Asia Innovators |
Ford and Matthews Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Matthews Asia
The main advantage of trading using opposite Ford and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Matthews Asia Innovators pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |