Correlation Between Matthews China and ProShares UltraShort
Can any of the company-specific risk be diversified away by investing in both Matthews China and ProShares UltraShort 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 ProShares UltraShort 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 ProShares UltraShort FTSE, you can compare the effects of market volatilities on Matthews China and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and ProShares UltraShort.
Diversification Opportunities for Matthews China and ProShares UltraShort
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Matthews and ProShares is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and ProShares UltraShort FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort FTSE 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort FTSE has no effect on the direction of Matthews China i.e., Matthews China and ProShares UltraShort go up and down completely randomly.
Pair Corralation between Matthews China and ProShares UltraShort
Given the investment horizon of 90 days Matthews China Discovery is expected to under-perform the ProShares UltraShort. But the etf apears to be less risky and, when comparing its historical volatility, Matthews China Discovery is 2.38 times less risky than ProShares UltraShort. The etf trades about -0.03 of its potential returns per unit of risk. The ProShares UltraShort FTSE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,819 in ProShares UltraShort FTSE on September 2, 2024 and sell it today you would earn a total of 127.00 from holding ProShares UltraShort FTSE or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Discovery vs. ProShares UltraShort FTSE
Performance |
| Timeline |
| Matthews China Discovery |
| ProShares UltraShort FTSE |
Matthews China and ProShares UltraShort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and ProShares UltraShort
The main advantage of trading using opposite Matthews China and ProShares UltraShort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, ProShares UltraShort 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 ProShares UltraShort will offset losses from the drop in ProShares UltraShort'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 |
| ProShares UltraShort vs. FT Vest Equity | ProShares UltraShort vs. Northern Lights | ProShares UltraShort vs. Dimensional International High | ProShares UltraShort vs. Matthews China Discovery |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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