Correlation Between Matthews China and Arrow Managed
Can any of the company-specific risk be diversified away by investing in both Matthews China and Arrow Managed 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 Arrow Managed 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 Arrow Managed Futures, you can compare the effects of market volatilities on Matthews China and Arrow Managed 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 Arrow Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Arrow Managed.
Diversification Opportunities for Matthews China and Arrow Managed
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and Arrow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Small and Arrow Managed Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Managed Futures 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 Arrow Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Managed Futures has no effect on the direction of Matthews China i.e., Matthews China and Arrow Managed go up and down completely randomly.
Pair Corralation between Matthews China and Arrow Managed
Assuming the 90 days horizon Matthews China Small is expected to generate 1.06 times more return on investment than Arrow Managed. However, Matthews China is 1.06 times more volatile than Arrow Managed Futures. It trades about 0.02 of its potential returns per unit of risk. Arrow Managed Futures is currently generating about 0.0 per unit of risk. If you would invest 922.00 in Matthews China Small on November 28, 2024 and sell it today you would earn a total of 37.00 from holding Matthews China Small or generate 4.01% 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. Arrow Managed Futures
Performance |
| Timeline |
| Matthews China Small |
| Arrow Managed Futures |
Matthews China and Arrow Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Arrow Managed
The main advantage of trading using opposite Matthews China and Arrow Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Arrow Managed 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 Arrow Managed will offset losses from the drop in Arrow Managed'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 |
| Arrow Managed vs. Us Government Securities | Arrow Managed vs. Inverse Government Long | Arrow Managed vs. John Hancock Government | Arrow Managed vs. Us Government Securities |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |