Correlation Between Matthews Emerging and First Trust
Can any of the company-specific risk be diversified away by investing in both Matthews Emerging and First Trust 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 First Trust 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 First Trust Dorsey, you can compare the effects of market volatilities on Matthews Emerging and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Emerging and First Trust.
Diversification Opportunities for Matthews Emerging and First Trust
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Matthews and First is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Emerging Markets and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Dorsey has no effect on the direction of Matthews Emerging i.e., Matthews Emerging and First Trust go up and down completely randomly.
Pair Corralation between Matthews Emerging and First Trust
Given the investment horizon of 90 days Matthews Emerging Markets is expected to under-perform the First Trust. But the etf apears to be less risky and, when comparing its historical volatility, Matthews Emerging Markets is 1.38 times less risky than First Trust. The etf trades about -0.01 of its potential returns per unit of risk. The First Trust Dorsey is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,484 in First Trust Dorsey on November 2, 2024 and sell it today you would earn a total of 778.00 from holding First Trust Dorsey or generate 14.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.04% |
| Values | Daily Returns |
Matthews Emerging Markets vs. First Trust Dorsey
Performance |
| Timeline |
| Matthews Emerging Markets |
| First Trust Dorsey |
Matthews Emerging and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Emerging and First Trust
The main advantage of trading using opposite Matthews Emerging and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Emerging position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Matthews Emerging vs. First Trust RiverFront | Matthews Emerging vs. First Trust RiverFront | Matthews Emerging vs. First Trust Emerging | Matthews Emerging vs. First Trust Emerging |
| First Trust vs. First Trust Dorsey | First Trust vs. Invesco DWA Momentum | First Trust vs. First Trust Capital | First Trust vs. First Trust Large |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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