Correlation Between Matthews Asian and Matthews Japan
Can any of the company-specific risk be diversified away by investing in both Matthews Asian and Matthews Japan 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 Matthews Asian and Matthews Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Asian Growth and Matthews Japan Fund, you can compare the effects of market volatilities on Matthews Asian and Matthews Japan 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 Matthews Asian with a short position of Matthews Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asian and Matthews Japan.
Diversification Opportunities for Matthews Asian and Matthews Japan
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Matthews and Matthews is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asian Growth and Matthews Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Japan and Matthews Asian 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 Matthews Asian Growth are associated (or correlated) with Matthews Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Japan has no effect on the direction of Matthews Asian i.e., Matthews Asian and Matthews Japan go up and down completely randomly.
Pair Corralation between Matthews Asian and Matthews Japan
Assuming the 90 days horizon Matthews Asian is expected to generate 1.68 times less return on investment than Matthews Japan. But when comparing it to its historical volatility, Matthews Asian Growth is 1.62 times less risky than Matthews Japan. It trades about 0.08 of its potential returns per unit of risk. Matthews Japan Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,569 in Matthews Japan Fund on August 29, 2024 and sell it today you would earn a total of 472.00 from holding Matthews Japan Fund or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Asian Growth vs. Matthews Japan Fund
Performance |
| Timeline |
| Matthews Asian Growth |
| Matthews Japan |
Matthews Asian and Matthews Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asian and Matthews Japan
The main advantage of trading using opposite Matthews Asian and Matthews Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asian position performs unexpectedly, Matthews Japan 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 Japan will offset losses from the drop in Matthews Japan's long position.| Matthews Asian vs. Matthews Asia Dividend | Matthews Asian vs. Wcm Focused International | Matthews Asian vs. Invesco Disciplined Equity | Matthews Asian vs. Matthews Asian Growth |
| Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews India Fund | Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews Asia Dividend |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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