Correlation Between SPDR SP and Matthews International
Can any of the company-specific risk be diversified away by investing in both SPDR SP and Matthews International 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 SPDR SP and Matthews International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SP Emerging and Matthews International Funds, you can compare the effects of market volatilities on SPDR SP and Matthews International 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 SPDR SP with a short position of Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and Matthews International.
Diversification Opportunities for SPDR SP and Matthews International
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between SPDR and Matthews is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Emerging and Matthews International Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and SPDR SP 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 SPDR SP Emerging are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of SPDR SP i.e., SPDR SP and Matthews International go up and down completely randomly.
Pair Corralation between SPDR SP and Matthews International
Considering the 90-day investment horizon SPDR SP Emerging is expected to generate 0.91 times more return on investment than Matthews International. However, SPDR SP Emerging is 1.09 times less risky than Matthews International. It trades about 0.05 of its potential returns per unit of risk. Matthews International Funds is currently generating about 0.02 per unit of risk. If you would invest 10,995 in SPDR SP Emerging on August 31, 2024 and sell it today you would earn a total of 744.00 from holding SPDR SP Emerging or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SP Emerging vs. Matthews International Funds
Performance |
| Timeline |
| SPDR SP Emerging |
| Matthews International |
SPDR SP and Matthews International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SP and Matthews International
The main advantage of trading using opposite SPDR SP and Matthews International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SP position performs unexpectedly, Matthews International 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 International will offset losses from the drop in Matthews International's long position.| SPDR SP vs. SPDR SP Emerging | SPDR SP vs. SPDR SP International | SPDR SP vs. SPDR SP China | SPDR SP vs. SPDR MSCI ACWI |
| Matthews International vs. iShares MSCI Emerging | Matthews International vs. Global X Funds | Matthews International vs. Franklin FTSE Asia | Matthews International vs. Franklin FTSE Europe |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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