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 Fund 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
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MATTHEWS and PRLAX is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund 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 Fund 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 Fund is expected to under-perform the T Rowe. In addition to that, Matthews China is 2.2 times more volatile than T Rowe Price. It trades about -0.13 of its total potential returns per unit of risk. T Rowe Price is currently generating about -0.21 per unit of volatility. If you would invest 1,991 in T Rowe Price on August 30, 2024 and sell it today you would lose (95.00) from holding T Rowe Price or give up 4.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Fund vs. T Rowe Price
Performance |
| Timeline |
| Matthews China |
| 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 India Fund | Matthews China vs. Matthews Pacific Tiger | Matthews China vs. Matthews Asian Growth | Matthews China vs. Guinness Atkinson China |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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