Correlation Between Matthews China and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both Matthews China and Direxion Shares 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 Direxion Shares 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 Direxion Shares ETF, you can compare the effects of market volatilities on Matthews China and Direxion Shares 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 Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Direxion Shares.
Diversification Opportunities for Matthews China and Direxion Shares
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and Direxion is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF 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 Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of Matthews China i.e., Matthews China and Direxion Shares go up and down completely randomly.
Pair Corralation between Matthews China and Direxion Shares
Given the investment horizon of 90 days Matthews China Discovery is expected to under-perform the Direxion Shares. But the etf apears to be less risky and, when comparing its historical volatility, Matthews China Discovery is 1.49 times less risky than Direxion Shares. The etf trades about -0.07 of its potential returns per unit of risk. The Direxion Shares ETF is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 3,635 in Direxion Shares ETF on September 3, 2024 and sell it today you would earn a total of 765.00 from holding Direxion Shares ETF or generate 21.05% 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. Direxion Shares ETF
Performance |
| Timeline |
| Matthews China Discovery |
| Direxion Shares ETF |
Matthews China and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Direxion Shares
The main advantage of trading using opposite Matthews China and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Direxion Shares 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 Direxion Shares will offset losses from the drop in Direxion Shares' 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 |
| Direxion Shares vs. ProShares Ultra SP500 | Direxion Shares vs. Direxion Daily SP500 | Direxion Shares vs. ProShares Ultra QQQ | Direxion Shares vs. Direxion Daily SP |
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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |