Correlation Between Matthews Asia and Matthews Emerging
Can any of the company-specific risk be diversified away by investing in both Matthews Asia and Matthews Emerging 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 Asia and Matthews Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Asia Innovators and Matthews Emerging Markets, you can compare the effects of market volatilities on Matthews Asia and Matthews Emerging 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 Asia with a short position of Matthews Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asia and Matthews Emerging.
Diversification Opportunities for Matthews Asia and Matthews Emerging
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matthews and Matthews is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asia Innovators and Matthews Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Emerging Markets and Matthews Asia 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 Asia Innovators are associated (or correlated) with Matthews Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Emerging Markets has no effect on the direction of Matthews Asia i.e., Matthews Asia and Matthews Emerging go up and down completely randomly.
Pair Corralation between Matthews Asia and Matthews Emerging
Assuming the 90 days horizon Matthews Asia Innovators is expected to under-perform the Matthews Emerging. In addition to that, Matthews Asia is 1.33 times more volatile than Matthews Emerging Markets. It trades about -0.14 of its total potential returns per unit of risk. Matthews Emerging Markets is currently generating about -0.07 per unit of volatility. If you would invest 1,328 in Matthews Emerging Markets on October 23, 2024 and sell it today you would lose (13.00) from holding Matthews Emerging Markets or give up 0.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Asia Innovators vs. Matthews Emerging Markets
Performance |
| Timeline |
| Matthews Asia Innovators |
| Matthews Emerging Markets |
Matthews Asia and Matthews Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asia and Matthews Emerging
The main advantage of trading using opposite Matthews Asia and Matthews Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asia position performs unexpectedly, Matthews Emerging 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 Emerging will offset losses from the drop in Matthews Emerging's long position.| Matthews Asia vs. Matthews Asian Growth | Matthews Asia vs. Matthews China Fund | Matthews Asia vs. Matthews India Fund | Matthews Asia vs. Matthews Asia Growth |
| Matthews Emerging vs. Matthews China Small | Matthews Emerging vs. Matthews Asia Small | Matthews Emerging vs. Matthews Asia Innovators | Matthews Emerging vs. Matthews China 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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