Correlation Between Small Cap and Matthews Pacific
Can any of the company-specific risk be diversified away by investing in both Small Cap and Matthews Pacific 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 Small Cap and Matthews Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Equity and Matthews Pacific Tiger, you can compare the effects of market volatilities on Small Cap and Matthews Pacific 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 Small Cap with a short position of Matthews Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Matthews Pacific.
Diversification Opportunities for Small Cap and Matthews Pacific
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Small and Matthews is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Equity and Matthews Pacific Tiger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Pacific Tiger and Small Cap 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 Small Cap Equity are associated (or correlated) with Matthews Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Pacific Tiger has no effect on the direction of Small Cap i.e., Small Cap and Matthews Pacific go up and down completely randomly.
Pair Corralation between Small Cap and Matthews Pacific
Assuming the 90 days horizon Small Cap Equity is expected to generate 1.54 times more return on investment than Matthews Pacific. However, Small Cap is 1.54 times more volatile than Matthews Pacific Tiger. It trades about 0.23 of its potential returns per unit of risk. Matthews Pacific Tiger is currently generating about -0.19 per unit of risk. If you would invest 3,390 in Small Cap Equity on August 30, 2024 and sell it today you would earn a total of 282.00 from holding Small Cap Equity or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Equity vs. Matthews Pacific Tiger
Performance |
| Timeline |
| Small Cap Equity |
| Matthews Pacific Tiger |
Small Cap and Matthews Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Matthews Pacific
The main advantage of trading using opposite Small Cap and Matthews Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Matthews Pacific 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 Pacific will offset losses from the drop in Matthews Pacific's long position.| Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index | Small Cap vs. Vanguard Small Cap Index |
| Matthews Pacific vs. Matthews Asia Dividend | Matthews Pacific vs. Wcm Focused International | Matthews Pacific vs. Invesco Disciplined Equity | Matthews Pacific vs. Matthews Asian Growth |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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