Correlation Between Matthews China and ETF Series
Can any of the company-specific risk be diversified away by investing in both Matthews China and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Matthews China and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and ETF Series.
Diversification Opportunities for Matthews China and ETF Series
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and ETF is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Matthews China i.e., Matthews China and ETF Series go up and down completely randomly.
Pair Corralation between Matthews China and ETF Series
Given the investment horizon of 90 days Matthews China is expected to generate 248.82 times less return on investment than ETF Series. But when comparing it to its historical volatility, Matthews China Discovery is 55.45 times less risky than ETF Series. It trades about 0.02 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.00 in ETF Series Solutions on September 3, 2024 and sell it today you would earn a total of 2,031 from holding ETF Series Solutions or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 38.94% |
| Values | Daily Returns |
Matthews China Discovery vs. ETF Series Solutions
Performance |
| Timeline |
| Matthews China Discovery |
| ETF Series Solutions |
Matthews China and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and ETF Series
The main advantage of trading using opposite Matthews China and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' 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 |
| ETF Series vs. FT Vest Equity | ETF Series vs. Northern Lights | ETF Series vs. Dimensional International High | ETF Series 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |