Correlation Between Matthews China and Matthews Emerging
Can any of the company-specific risk be diversified away by investing in both Matthews China 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 China 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 China Dividend and Matthews Emerging Markets, you can compare the effects of market volatilities on Matthews China 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 China with a short position of Matthews Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Matthews Emerging.
Diversification Opportunities for Matthews China and Matthews Emerging
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matthews and Matthews is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Dividend 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 China 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 China Dividend 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 China i.e., Matthews China and Matthews Emerging go up and down completely randomly.
Pair Corralation between Matthews China and Matthews Emerging
Assuming the 90 days horizon Matthews China Dividend is expected to generate 1.03 times more return on investment than Matthews Emerging. However, Matthews China is 1.03 times more volatile than Matthews Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Matthews Emerging Markets is currently generating about 0.06 per unit of risk. If you would invest 1,158 in Matthews China Dividend on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Matthews China Dividend or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Dividend vs. Matthews Emerging Markets
Performance |
| Timeline |
| Matthews China Dividend |
| Matthews Emerging Markets |
Matthews China and Matthews Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Matthews Emerging
The main advantage of trading using opposite Matthews China and Matthews Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China 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 China vs. Matthews China Small | Matthews China vs. Matthews Asia Dividend | Matthews China vs. Matthews Asia Small | Matthews China 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |