Correlation Between Matthews China and FT Cboe
Can any of the company-specific risk be diversified away by investing in both Matthews China and FT Cboe 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 Cboe 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 Cboe Vest, you can compare the effects of market volatilities on Matthews China and FT Cboe 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 Cboe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and FT Cboe.
Diversification Opportunities for Matthews China and FT Cboe
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and DJUL is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and FT Cboe Vest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Cboe Vest 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 Cboe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Cboe Vest has no effect on the direction of Matthews China i.e., Matthews China and FT Cboe go up and down completely randomly.
Pair Corralation between Matthews China and FT Cboe
Given the investment horizon of 90 days Matthews China Discovery is expected to under-perform the FT Cboe. In addition to that, Matthews China is 5.34 times more volatile than FT Cboe Vest. It trades about -0.04 of its total potential returns per unit of risk. FT Cboe Vest is currently generating about 0.42 per unit of volatility. If you would invest 4,109 in FT Cboe Vest on September 1, 2024 and sell it today you would earn a total of 131.00 from holding FT Cboe Vest or generate 3.19% 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. FT Cboe Vest
Performance |
| Timeline |
| Matthews China Discovery |
| FT Cboe Vest |
Matthews China and FT Cboe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and FT Cboe
The main advantage of trading using opposite Matthews China and FT Cboe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, FT Cboe 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 Cboe will offset losses from the drop in FT Cboe'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 Cboe vs. Innovator ETFs Trust | FT Cboe vs. First Trust Cboe | FT Cboe vs. Innovator SP 500 | FT Cboe vs. Innovator Equity Power |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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