Correlation Between Matthews Emerging and Freedom Day
Can any of the company-specific risk be diversified away by investing in both Matthews Emerging and Freedom Day 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 Freedom Day 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 Freedom Day Dividend, you can compare the effects of market volatilities on Matthews Emerging and Freedom Day 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 Freedom Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Emerging and Freedom Day.
Diversification Opportunities for Matthews Emerging and Freedom Day
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Matthews and Freedom is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Emerging Markets and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend 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 Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of Matthews Emerging i.e., Matthews Emerging and Freedom Day go up and down completely randomly.
Pair Corralation between Matthews Emerging and Freedom Day
Given the investment horizon of 90 days Matthews Emerging Markets is expected to under-perform the Freedom Day. But the etf apears to be less risky and, when comparing its historical volatility, Matthews Emerging Markets is 1.41 times less risky than Freedom Day. The etf trades about -0.07 of its potential returns per unit of risk. The Freedom Day Dividend is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 3,319 in Freedom Day Dividend on September 4, 2024 and sell it today you would earn a total of 203.00 from holding Freedom Day Dividend or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Emerging Markets vs. Freedom Day Dividend
Performance |
| Timeline |
| Matthews Emerging Markets |
| Freedom Day Dividend |
Matthews Emerging and Freedom Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Emerging and Freedom Day
The main advantage of trading using opposite Matthews Emerging and Freedom Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Emerging position performs unexpectedly, Freedom Day 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 Freedom Day will offset losses from the drop in Freedom Day'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 |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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