Correlation Between Matthews China and WisdomTree Trust
Can any of the company-specific risk be diversified away by investing in both Matthews China and WisdomTree Trust 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 WisdomTree Trust 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 WisdomTree Trust , you can compare the effects of market volatilities on Matthews China and WisdomTree Trust 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 WisdomTree Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and WisdomTree Trust.
Diversification Opportunities for Matthews China and WisdomTree Trust
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and WisdomTree is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and WisdomTree Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Trust has no effect on the direction of Matthews China i.e., Matthews China and WisdomTree Trust go up and down completely randomly.
Pair Corralation between Matthews China and WisdomTree Trust
Given the investment horizon of 90 days Matthews China is expected to generate 7.73 times less return on investment than WisdomTree Trust. In addition to that, Matthews China is 1.74 times more volatile than WisdomTree Trust . It trades about 0.01 of its total potential returns per unit of risk. WisdomTree Trust is currently generating about 0.1 per unit of volatility. If you would invest 4,186 in WisdomTree Trust on August 29, 2024 and sell it today you would earn a total of 691.00 from holding WisdomTree Trust or generate 16.51% 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. WisdomTree Trust
Performance |
| Timeline |
| Matthews China Discovery |
| WisdomTree Trust |
Matthews China and WisdomTree Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and WisdomTree Trust
The main advantage of trading using opposite Matthews China and WisdomTree Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, WisdomTree Trust 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 WisdomTree Trust will offset losses from the drop in WisdomTree Trust's long position.| Matthews China vs. Matthews Emerging Markets | Matthews China vs. Neuberger Berman ETF | Matthews China vs. Fidelity Small Mid Cap | Matthews China vs. Professionally Managed Portfolios |
| WisdomTree Trust vs. iShares MSCI USA | WisdomTree Trust vs. iShares MSCI USA | WisdomTree Trust vs. iShares MSCI USA | WisdomTree Trust vs. iShares Expanded Tech Software |
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 CEOs Directory module to screen CEOs from public companies around the world.
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