Correlation Between Matthews China and American Beacon
Can any of the company-specific risk be diversified away by investing in both Matthews China and American Beacon 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 American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Small and American Beacon Bridgeway, you can compare the effects of market volatilities on Matthews China and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and American Beacon.
Diversification Opportunities for Matthews China and American Beacon
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and American is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Small and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway 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 Small are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Bridgeway has no effect on the direction of Matthews China i.e., Matthews China and American Beacon go up and down completely randomly.
Pair Corralation between Matthews China and American Beacon
Assuming the 90 days horizon Matthews China Small is expected to under-perform the American Beacon. In addition to that, Matthews China is 2.5 times more volatile than American Beacon Bridgeway. It trades about -0.06 of its total potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.16 per unit of volatility. If you would invest 2,689 in American Beacon Bridgeway on August 30, 2024 and sell it today you would earn a total of 166.00 from holding American Beacon Bridgeway or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Small vs. American Beacon Bridgeway
Performance |
| Timeline |
| Matthews China Small |
| American Beacon Bridgeway |
Matthews China and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and American Beacon
The main advantage of trading using opposite Matthews China and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews Asia Innovators | Matthews China vs. Matthews Asia Small | Matthews China vs. Matthews China Fund |
| American Beacon vs. Amg Managers Skyline | American Beacon vs. The Hartford International | American Beacon vs. Baird E Plus | American Beacon vs. Artisan Developing World |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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