Correlation Between Matthews Emerging and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Matthews Emerging and IShares MSCI 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 MSCI 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 MSCI Frontier, you can compare the effects of market volatilities on Matthews Emerging and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Emerging and IShares MSCI.
Diversification Opportunities for Matthews Emerging and IShares MSCI
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Matthews and IShares is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Emerging Markets and iShares MSCI Frontier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Frontier 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Frontier has no effect on the direction of Matthews Emerging i.e., Matthews Emerging and IShares MSCI go up and down completely randomly.
Pair Corralation between Matthews Emerging and IShares MSCI
Given the investment horizon of 90 days Matthews Emerging Markets is expected to generate 3.56 times more return on investment than IShares MSCI. However, Matthews Emerging is 3.56 times more volatile than iShares MSCI Frontier. It trades about 0.06 of its potential returns per unit of risk. iShares MSCI Frontier is currently generating about 0.1 per unit of risk. If you would invest 2,902 in Matthews Emerging Markets on October 20, 2024 and sell it today you would earn a total of 23.00 from holding Matthews Emerging Markets or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 70.0% |
| Values | Daily Returns |
Matthews Emerging Markets vs. iShares MSCI Frontier
Performance |
| Timeline |
| Matthews Emerging Markets |
| iShares MSCI Frontier |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Matthews Emerging and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Emerging and IShares MSCI
The main advantage of trading using opposite Matthews Emerging and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Emerging position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI'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 MSCI vs. iShares MSCI Poland | IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares MSCI Philippines | IShares MSCI vs. iShares MSCI Indonesia |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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