Correlation Between Matthews China and Global X
Can any of the company-specific risk be diversified away by investing in both Matthews China and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on Matthews China and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Global X.
Diversification Opportunities for Matthews China and Global X
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Global is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Matthews China i.e., Matthews China and Global X go up and down completely randomly.
Pair Corralation between Matthews China and Global X
Given the investment horizon of 90 days Matthews China is expected to generate 1.48 times less return on investment than Global X. In addition to that, Matthews China is 3.77 times more volatile than Global X Funds. It trades about 0.02 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.13 per unit of volatility. If you would invest 2,401 in Global X Funds on September 3, 2024 and sell it today you would earn a total of 242.00 from holding Global X Funds or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 63.72% |
| Values | Daily Returns |
Matthews China Discovery vs. Global X Funds
Performance |
| Timeline |
| Matthews China Discovery |
| Global X Funds |
Matthews China and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Global X
The main advantage of trading using opposite Matthews China and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's 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 |
| Global X vs. Global X SP | Global X vs. Global X NASDAQ | Global X vs. NEOS ETF Trust | Global X vs. JPMorgan Equity Premium |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |