Correlation Between Matthews China and IShares SP
Can any of the company-specific risk be diversified away by investing in both Matthews China and IShares SP 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 IShares SP 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 iShares SP Mid Cap, you can compare the effects of market volatilities on Matthews China and IShares SP 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and IShares SP.
Diversification Opportunities for Matthews China and IShares SP
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Matthews and IShares is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and iShares SP Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Mid 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Mid has no effect on the direction of Matthews China i.e., Matthews China and IShares SP go up and down completely randomly.
Pair Corralation between Matthews China and IShares SP
Given the investment horizon of 90 days Matthews China is expected to generate 4.11 times less return on investment than IShares SP. In addition to that, Matthews China is 1.43 times more volatile than iShares SP Mid Cap. It trades about 0.04 of its total potential returns per unit of risk. iShares SP Mid Cap is currently generating about 0.25 per unit of volatility. If you would invest 9,128 in iShares SP Mid Cap on October 20, 2024 and sell it today you would earn a total of 351.00 from holding iShares SP Mid Cap or generate 3.85% 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. iShares SP Mid Cap
Performance |
| Timeline |
| Matthews China Discovery |
| iShares SP Mid |
Matthews China and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and IShares SP
The main advantage of trading using opposite Matthews China and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, IShares SP 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 IShares SP will offset losses from the drop in IShares SP's long position.| Matthews China vs. JPMorgan Fundamental Data | Matthews China vs. Davis Select International | Matthews China vs. Dimensional ETF Trust | Matthews China vs. Principal Value ETF |
| IShares SP vs. JPMorgan Fundamental Data | IShares SP vs. Matthews China Discovery | IShares SP vs. Davis Select International | IShares SP vs. Dimensional ETF Trust |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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