Correlation Between Matthews China and FT Vest
Can any of the company-specific risk be diversified away by investing in both Matthews China and FT Vest 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 FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Discovery and FT Vest Equity, you can compare the effects of market volatilities on Matthews China and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and FT Vest.
Diversification Opportunities for Matthews China and FT Vest
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Matthews and DHDG is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity 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 Discovery are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Matthews China i.e., Matthews China and FT Vest go up and down completely randomly.
Pair Corralation between Matthews China and FT Vest
Given the investment horizon of 90 days Matthews China is expected to generate 1.55 times less return on investment than FT Vest. In addition to that, Matthews China is 4.84 times more volatile than FT Vest Equity. It trades about 0.02 of its total potential returns per unit of risk. FT Vest Equity is currently generating about 0.18 per unit of volatility. If you would invest 3,038 in FT Vest Equity on September 2, 2024 and sell it today you would earn a total of 65.00 from holding FT Vest Equity or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 13.27% |
| Values | Daily Returns |
Matthews China Discovery vs. FT Vest Equity
Performance |
| Timeline |
| Matthews China Discovery |
| FT Vest Equity |
Matthews China and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and FT Vest
The main advantage of trading using opposite Matthews China and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest's long position.| Matthews China vs. FT Vest Equity | Matthews China vs. Northern Lights | Matthews China vs. Dimensional International High | Matthews China vs. Davis Select International |
| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. Matthews China Discovery | FT Vest vs. Davis Select 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |