Correlation Between Matthews China and T Rowe
Can any of the company-specific risk be diversified away by investing in both Matthews China and T Rowe 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 T Rowe 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 T Rowe Price, you can compare the effects of market volatilities on Matthews China and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and T Rowe.
Diversification Opportunities for Matthews China and T Rowe
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Matthews and TCELX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Dividend and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Matthews China i.e., Matthews China and T Rowe go up and down completely randomly.
Pair Corralation between Matthews China and T Rowe
Assuming the 90 days horizon Matthews China Dividend is expected to generate 1.18 times more return on investment than T Rowe. However, Matthews China is 1.18 times more volatile than T Rowe Price. It trades about -0.08 of its potential returns per unit of risk. T Rowe Price is currently generating about -0.13 per unit of risk. If you would invest 1,257 in Matthews China Dividend on August 29, 2024 and sell it today you would lose (103.00) from holding Matthews China Dividend or give up 8.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Dividend vs. T Rowe Price
Performance |
| Timeline |
| Matthews China Dividend |
| T Rowe Price |
Matthews China and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and T Rowe
The main advantage of trading using opposite Matthews China and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe'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 |
| T Rowe vs. Matthews China Dividend | T Rowe vs. Matthews China Fund | T Rowe vs. Matthews China Small | T Rowe vs. Aquagold International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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