Correlation Between Matthews China and Vanguard Russell
Can any of the company-specific risk be diversified away by investing in both Matthews China and Vanguard Russell 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 Vanguard Russell 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 Vanguard Russell 2000, you can compare the effects of market volatilities on Matthews China and Vanguard Russell 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 Vanguard Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Vanguard Russell.
Diversification Opportunities for Matthews China and Vanguard Russell
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Matthews and Vanguard is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Vanguard Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Russell 2000 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 Vanguard Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Russell 2000 has no effect on the direction of Matthews China i.e., Matthews China and Vanguard Russell go up and down completely randomly.
Pair Corralation between Matthews China and Vanguard Russell
Given the investment horizon of 90 days Matthews China Discovery is expected to generate 2.06 times more return on investment than Vanguard Russell. However, Matthews China is 2.06 times more volatile than Vanguard Russell 2000. It trades about 0.08 of its potential returns per unit of risk. Vanguard Russell 2000 is currently generating about 0.04 per unit of risk. If you would invest 2,257 in Matthews China Discovery on November 2, 2024 and sell it today you would earn a total of 441.00 from holding Matthews China Discovery or generate 19.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Discovery vs. Vanguard Russell 2000
Performance |
| Timeline |
| Matthews China Discovery |
| Vanguard Russell 2000 |
Matthews China and Vanguard Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Vanguard Russell
The main advantage of trading using opposite Matthews China and Vanguard Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Vanguard Russell 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 Vanguard Russell will offset losses from the drop in Vanguard Russell's long position.| Matthews China vs. Matthews Emerging Markets | Matthews China vs. Morgan Stanley Pathway | Matthews China vs. Neuberger Berman ETF | Matthews China vs. Fidelity Small Mid Cap |
| Vanguard Russell vs. Dimensional ETF Trust | Vanguard Russell vs. Vanguard Small Cap Index | Vanguard Russell vs. First Trust Multi Manager | Vanguard Russell vs. Vanguard SP Small Cap |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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