Correlation Between Matthews Emerging and IShares AsiaPacific
Can any of the company-specific risk be diversified away by investing in both Matthews Emerging and IShares AsiaPacific 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 Emerging and IShares AsiaPacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Emerging Markets and iShares AsiaPacific Dividend, you can compare the effects of market volatilities on Matthews Emerging and IShares AsiaPacific 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 Emerging with a short position of IShares AsiaPacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Emerging and IShares AsiaPacific.
Diversification Opportunities for Matthews Emerging and IShares AsiaPacific
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and IShares is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Emerging Markets and iShares AsiaPacific Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AsiaPacific and Matthews Emerging 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 Emerging Markets are associated (or correlated) with IShares AsiaPacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AsiaPacific has no effect on the direction of Matthews Emerging i.e., Matthews Emerging and IShares AsiaPacific go up and down completely randomly.
Pair Corralation between Matthews Emerging and IShares AsiaPacific
Given the investment horizon of 90 days Matthews Emerging Markets is expected to under-perform the IShares AsiaPacific. But the etf apears to be less risky and, when comparing its historical volatility, Matthews Emerging Markets is 1.55 times less risky than IShares AsiaPacific. The etf trades about -0.16 of its potential returns per unit of risk. The iShares AsiaPacific Dividend is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,725 in iShares AsiaPacific Dividend on August 31, 2024 and sell it today you would earn a total of 2.00 from holding iShares AsiaPacific Dividend or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Emerging Markets vs. iShares AsiaPacific Dividend
Performance |
| Timeline |
| Matthews Emerging Markets |
| iShares AsiaPacific |
Matthews Emerging and IShares AsiaPacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Emerging and IShares AsiaPacific
The main advantage of trading using opposite Matthews Emerging and IShares AsiaPacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Emerging position performs unexpectedly, IShares AsiaPacific 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 IShares AsiaPacific will offset losses from the drop in IShares AsiaPacific's long position.| Matthews Emerging vs. Matthews Asia Innovators | Matthews Emerging vs. Columbia EM Core | Matthews Emerging vs. MAYBANK EMERGING ETF | Matthews Emerging vs. Matthews China Active |
| IShares AsiaPacific vs. Franklin Templeton ETF | IShares AsiaPacific vs. Altrius Global Dividend | IShares AsiaPacific vs. Invesco Exchange Traded | IShares AsiaPacific vs. Franklin International Core |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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