Correlation Between Matthews China and Dimensional International
Can any of the company-specific risk be diversified away by investing in both Matthews China and Dimensional International 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 Dimensional International 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 Dimensional International High, you can compare the effects of market volatilities on Matthews China and Dimensional International 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 Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Dimensional International.
Diversification Opportunities for Matthews China and Dimensional International
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Matthews and Dimensional is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International 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 Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of Matthews China i.e., Matthews China and Dimensional International go up and down completely randomly.
Pair Corralation between Matthews China and Dimensional International
Given the investment horizon of 90 days Matthews China Discovery is expected to under-perform the Dimensional International. In addition to that, Matthews China is 2.36 times more volatile than Dimensional International High. It trades about -0.07 of its total potential returns per unit of risk. Dimensional International High is currently generating about 0.01 per unit of volatility. If you would invest 2,618 in Dimensional International High on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Dimensional International High or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Discovery vs. Dimensional International High
Performance |
| Timeline |
| Matthews China Discovery |
| Dimensional International |
Matthews China and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Dimensional International
The main advantage of trading using opposite Matthews China and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Dimensional International 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 Dimensional International will offset losses from the drop in Dimensional International's long position.| Matthews China vs. FT Vest Equity | Matthews China vs. Northern Lights | Matthews China vs. Dimensional International High | Matthews China vs. JPMorgan Fundamental Data |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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