Correlation Between Matthews China and Matthews China
Can any of the company-specific risk be diversified away by investing in both Matthews China and Matthews 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 Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Fund and Matthews China Dividend, you can compare the effects of market volatilities on Matthews China and Matthews 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 Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Matthews China.
Diversification Opportunities for Matthews China and Matthews China
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Matthews and Matthews is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Matthews China Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Dividend 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 Fund are associated (or correlated) with Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China Dividend has no effect on the direction of Matthews China i.e., Matthews China and Matthews China go up and down completely randomly.
Pair Corralation between Matthews China and Matthews China
Assuming the 90 days horizon Matthews China Fund is expected to under-perform the Matthews China. In addition to that, Matthews China is 1.49 times more volatile than Matthews China Dividend. It trades about -0.09 of its total potential returns per unit of risk. Matthews China Dividend is currently generating about -0.1 per unit of volatility. If you would invest 1,217 in Matthews China Dividend on September 1, 2024 and sell it today you would lose (41.00) from holding Matthews China Dividend or give up 3.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Fund vs. Matthews China Dividend
Performance |
| Timeline |
| Matthews China |
| Matthews China Dividend |
Matthews China and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Matthews China
The main advantage of trading using opposite Matthews China and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Matthews 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 Matthews China will offset losses from the drop in Matthews China's long position.| Matthews China vs. Matthews Pacific Tiger | Matthews China vs. Matthews India Fund | Matthews China vs. Matthews Asia Growth | Matthews China vs. Matthews China Dividend |
| Matthews China vs. Matthews China Small | Matthews China vs. Matthews Asia Dividend | Matthews China vs. Matthews Asia Small | Matthews China vs. Matthews Asia Growth |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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