Correlation Between Matthews China and Innovator ETFs
Can any of the company-specific risk be diversified away by investing in both Matthews China and Innovator ETFs 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 Innovator ETFs 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 Innovator ETFs Trust, you can compare the effects of market volatilities on Matthews China and Innovator ETFs 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 Innovator ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Innovator ETFs.
Diversification Opportunities for Matthews China and Innovator ETFs
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Innovator is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Innovator ETFs Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator ETFs 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 Innovator ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator ETFs Trust has no effect on the direction of Matthews China i.e., Matthews China and Innovator ETFs go up and down completely randomly.
Pair Corralation between Matthews China and Innovator ETFs
Given the investment horizon of 90 days Matthews China Discovery is expected to under-perform the Innovator ETFs. In addition to that, Matthews China is 2.56 times more volatile than Innovator ETFs Trust. It trades about 0.0 of its total potential returns per unit of risk. Innovator ETFs Trust is currently generating about 0.27 per unit of volatility. If you would invest 2,866 in Innovator ETFs Trust on October 24, 2024 and sell it today you would earn a total of 62.00 from holding Innovator ETFs Trust or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Discovery vs. Innovator ETFs Trust
Performance |
| Timeline |
| Matthews China Discovery |
| Innovator ETFs Trust |
Matthews China and Innovator ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Innovator ETFs
The main advantage of trading using opposite Matthews China and Innovator ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Innovator ETFs 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 Innovator ETFs will offset losses from the drop in Innovator ETFs' 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 |
| Innovator ETFs vs. FT Vest Equity | Innovator ETFs vs. Northern Lights | Innovator ETFs vs. Dimensional International High | Innovator ETFs 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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