Correlation Between Matthews China and JPMorgan BetaBuilders
Can any of the company-specific risk be diversified away by investing in both Matthews China and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders 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 JPMorgan BetaBuilders Developed, you can compare the effects of market volatilities on Matthews China and JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and JPMorgan BetaBuilders.
Diversification Opportunities for Matthews China and JPMorgan BetaBuilders
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and JPMorgan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Active and JPMorgan BetaBuilders Develope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan BetaBuilders 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 JPMorgan BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan BetaBuilders has no effect on the direction of Matthews China i.e., Matthews China and JPMorgan BetaBuilders go up and down completely randomly.
Pair Corralation between Matthews China and JPMorgan BetaBuilders
Considering the 90-day investment horizon Matthews China Active is expected to under-perform the JPMorgan BetaBuilders. In addition to that, Matthews China is 2.21 times more volatile than JPMorgan BetaBuilders Developed. It trades about -0.2 of its total potential returns per unit of risk. JPMorgan BetaBuilders Developed is currently generating about 0.02 per unit of volatility. If you would invest 5,178 in JPMorgan BetaBuilders Developed on August 28, 2024 and sell it today you would earn a total of 12.00 from holding JPMorgan BetaBuilders Developed or generate 0.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Active vs. JPMorgan BetaBuilders Develope
Performance |
| Timeline |
| Matthews China Active |
| JPMorgan BetaBuilders |
Matthews China and JPMorgan BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and JPMorgan BetaBuilders
The main advantage of trading using opposite Matthews China and JPMorgan BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, JPMorgan BetaBuilders 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 JPMorgan BetaBuilders will offset losses from the drop in JPMorgan BetaBuilders' long position.| Matthews China vs. iShares MSCI Singapore | Matthews China vs. iShares MSCI Malaysia | Matthews China vs. iShares MSCI Australia | Matthews China vs. iShares MSCI South |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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