Correlation Between Matthews China and Wcm China
Can any of the company-specific risk be diversified away by investing in both Matthews China and Wcm China 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 Wcm China 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 Wcm China Quality, you can compare the effects of market volatilities on Matthews China and Wcm China 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 Wcm China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Wcm China.
Diversification Opportunities for Matthews China and Wcm China
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Matthews and Wcm is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Wcm China Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wcm China Quality 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 Wcm China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wcm China Quality has no effect on the direction of Matthews China i.e., Matthews China and Wcm China go up and down completely randomly.
Pair Corralation between Matthews China and Wcm China
Assuming the 90 days horizon Matthews China Fund is expected to under-perform the Wcm China. In addition to that, Matthews China is 1.56 times more volatile than Wcm China Quality. It trades about -0.13 of its total potential returns per unit of risk. Wcm China Quality is currently generating about -0.16 per unit of volatility. If you would invest 918.00 in Wcm China Quality on September 3, 2024 and sell it today you would lose (46.00) from holding Wcm China Quality or give up 5.01% 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 Fund vs. Wcm China Quality
Performance |
| Timeline |
| Matthews China |
| Wcm China Quality |
Matthews China and Wcm China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Wcm China
The main advantage of trading using opposite Matthews China and Wcm China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Wcm China 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 Wcm China will offset losses from the drop in Wcm China's long position.| Matthews China vs. T Rowe Price | Matthews China vs. Matthews India Fund | Matthews China vs. Aquagold International | Matthews China vs. Morningstar Unconstrained Allocation |
| Wcm China vs. Franklin Mutual Global | Wcm China vs. Dreyfusstandish Global Fixed | Wcm China vs. Ab Global Risk | Wcm China vs. Barings Global Floating |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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