Correlation Between Matthews China and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Matthews China and Dimensional ETF 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 ETF 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 ETF Trust, you can compare the effects of market volatilities on Matthews China and Dimensional ETF 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 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Dimensional ETF.
Diversification Opportunities for Matthews China and Dimensional ETF
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and Dimensional is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust 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 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Matthews China i.e., Matthews China and Dimensional ETF go up and down completely randomly.
Pair Corralation between Matthews China and Dimensional ETF
Given the investment horizon of 90 days Matthews China Discovery is expected to generate 2.25 times more return on investment than Dimensional ETF. However, Matthews China is 2.25 times more volatile than Dimensional ETF Trust. It trades about 0.04 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.04 per unit of risk. If you would invest 2,598 in Matthews China Discovery on November 1, 2024 and sell it today you would earn a total of 100.00 from holding Matthews China Discovery or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Discovery vs. Dimensional ETF Trust
Performance |
| Timeline |
| Matthews China Discovery |
| Dimensional ETF Trust |
Matthews China and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Dimensional ETF
The main advantage of trading using opposite Matthews China and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Dimensional ETF 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 ETF will offset losses from the drop in Dimensional ETF's long position.| Matthews China vs. Matthews Emerging Markets | Matthews China vs. Morgan Stanley Pathway | Matthews China vs. Neuberger Berman ETF | Matthews China vs. Fidelity Small Mid Cap |
| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional International Value | Dimensional ETF vs. Dimensional Targeted Value |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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