Correlation Between Matthews Asian and Sparta Capital
Can any of the company-specific risk be diversified away by investing in both Matthews Asian and Sparta Capital 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 Sparta Capital 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 Sparta Capital, you can compare the effects of market volatilities on Matthews Asian and Sparta Capital 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 Sparta Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asian and Sparta Capital.
Diversification Opportunities for Matthews Asian and Sparta Capital
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Matthews and Sparta is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asian Growth and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital 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 Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of Matthews Asian i.e., Matthews Asian and Sparta Capital go up and down completely randomly.
Pair Corralation between Matthews Asian and Sparta Capital
Assuming the 90 days horizon Matthews Asian Growth is expected to generate 0.16 times more return on investment than Sparta Capital. However, Matthews Asian Growth is 6.08 times less risky than Sparta Capital. It trades about -0.18 of its potential returns per unit of risk. Sparta Capital is currently generating about -0.21 per unit of risk. If you would invest 1,385 in Matthews Asian Growth on August 30, 2024 and sell it today you would lose (46.00) from holding Matthews Asian Growth or give up 3.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Asian Growth vs. Sparta Capital
Performance |
| Timeline |
| Matthews Asian Growth |
| Sparta Capital |
Matthews Asian and Sparta Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asian and Sparta Capital
The main advantage of trading using opposite Matthews Asian and Sparta Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asian position performs unexpectedly, Sparta Capital 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 Sparta Capital will offset losses from the drop in Sparta Capital'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 |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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