Correlation Between Matthews International and World Oil
Can any of the company-specific risk be diversified away by investing in both Matthews International and World Oil 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 International and World Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews International and World Oil Group, you can compare the effects of market volatilities on Matthews International and World Oil 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 International with a short position of World Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews International and World Oil.
Diversification Opportunities for Matthews International and World Oil
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and World is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International and World Oil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Oil Group and Matthews International 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 International are associated (or correlated) with World Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Oil Group has no effect on the direction of Matthews International i.e., Matthews International and World Oil go up and down completely randomly.
Pair Corralation between Matthews International and World Oil
Given the investment horizon of 90 days Matthews International is expected to generate 0.41 times more return on investment than World Oil. However, Matthews International is 2.43 times less risky than World Oil. It trades about -0.15 of its potential returns per unit of risk. World Oil Group is currently generating about -0.16 per unit of risk. If you would invest 2,859 in Matthews International on November 27, 2024 and sell it today you would lose (368.50) from holding Matthews International or give up 12.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Matthews International vs. World Oil Group
Performance |
| Timeline |
| Matthews International |
| World Oil Group |
Matthews International and World Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews International and World Oil
The main advantage of trading using opposite Matthews International and World Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews International position performs unexpectedly, World Oil 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 World Oil will offset losses from the drop in World Oil's long position.| Matthews International vs. Steel Partners Holdings | Matthews International vs. Compass Diversified | Matthews International vs. Brookfield Business Partners | Matthews International vs. Tejon Ranch Co |
| World Oil vs. NanoTech Gaming | World Oil vs. Games Workshop Group | World Oil vs. ChampionX | World Oil vs. Emerson Electric |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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