Correlation Between Matthews China and SmartETFs Asia
Can any of the company-specific risk be diversified away by investing in both Matthews China and SmartETFs Asia 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 SmartETFs Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Active and SmartETFs Asia Pacific, you can compare the effects of market volatilities on Matthews China and SmartETFs Asia 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 SmartETFs Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and SmartETFs Asia.
Diversification Opportunities for Matthews China and SmartETFs Asia
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matthews and SmartETFs is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Active and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific 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 Active are associated (or correlated) with SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of Matthews China i.e., Matthews China and SmartETFs Asia go up and down completely randomly.
Pair Corralation between Matthews China and SmartETFs Asia
Considering the 90-day investment horizon Matthews China Active is expected to under-perform the SmartETFs Asia. In addition to that, Matthews China is 2.12 times more volatile than SmartETFs Asia Pacific. It trades about -0.16 of its total potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about -0.11 per unit of volatility. If you would invest 1,602 in SmartETFs Asia Pacific on August 24, 2024 and sell it today you would lose (43.00) from holding SmartETFs Asia Pacific or give up 2.68% 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 Active vs. SmartETFs Asia Pacific
Performance |
| Timeline |
| Matthews China Active |
| SmartETFs Asia Pacific |
Matthews China and SmartETFs Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and SmartETFs Asia
The main advantage of trading using opposite Matthews China and SmartETFs Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, SmartETFs Asia 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 SmartETFs Asia will offset losses from the drop in SmartETFs Asia's long position.| Matthews China vs. iShares MSCI Singapore | Matthews China vs. iShares MSCI Taiwan | Matthews China vs. iShares MSCI Malaysia | Matthews China vs. iShares MSCI Australia |
| SmartETFs Asia vs. Matthews China Active | SmartETFs Asia vs. MAYBANK EMERGING ETF | SmartETFs Asia vs. Matthews Emerging Markets | SmartETFs Asia vs. JP Morgan Exchange Traded |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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