Correlation Between Matthews China and Fidelity China
Can any of the company-specific risk be diversified away by investing in both Matthews China and Fidelity China 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 Fidelity China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Dividend and Fidelity China Region, you can compare the effects of market volatilities on Matthews China and Fidelity China 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 Fidelity China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Fidelity China.
Diversification Opportunities for Matthews China and Fidelity China
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Matthews and Fidelity is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Dividend and Fidelity China Region in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity China Region 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 Dividend are associated (or correlated) with Fidelity China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity China Region has no effect on the direction of Matthews China i.e., Matthews China and Fidelity China go up and down completely randomly.
Pair Corralation between Matthews China and Fidelity China
Assuming the 90 days horizon Matthews China Dividend is expected to under-perform the Fidelity China. In addition to that, Matthews China is 1.06 times more volatile than Fidelity China Region. It trades about -0.01 of its total potential returns per unit of risk. Fidelity China Region is currently generating about 0.03 per unit of volatility. If you would invest 3,266 in Fidelity China Region on August 30, 2024 and sell it today you would earn a total of 603.00 from holding Fidelity China Region or generate 18.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Dividend vs. Fidelity China Region
Performance |
| Timeline |
| Matthews China Dividend |
| Fidelity China Region |
Matthews China and Fidelity China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Fidelity China
The main advantage of trading using opposite Matthews China and Fidelity China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Fidelity China 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 Fidelity China will offset losses from the drop in Fidelity China's long position.| Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews China Fund | Matthews China vs. Matthews China Small | Matthews China vs. Aquagold International |
| Fidelity China vs. Fidelity China Region | Fidelity China vs. Fidelity China Region | Fidelity China vs. Fidelity Advisor Emerging | Fidelity China vs. Fidelity Advisor Biotechnology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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