Correlation Between Matthews China and Prudential Jennison
Can any of the company-specific risk be diversified away by investing in both Matthews China and Prudential Jennison 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 Prudential Jennison 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 Prudential Jennison Mid Cap, you can compare the effects of market volatilities on Matthews China and Prudential Jennison 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 Prudential Jennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Prudential Jennison.
Diversification Opportunities for Matthews China and Prudential Jennison
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and Prudential is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Prudential Jennison Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Jennison Mid 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 Prudential Jennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Jennison Mid has no effect on the direction of Matthews China i.e., Matthews China and Prudential Jennison go up and down completely randomly.
Pair Corralation between Matthews China and Prudential Jennison
Assuming the 90 days horizon Matthews China Fund is expected to under-perform the Prudential Jennison. In addition to that, Matthews China is 1.78 times more volatile than Prudential Jennison Mid Cap. It trades about -0.01 of its total potential returns per unit of risk. Prudential Jennison Mid Cap is currently generating about 0.06 per unit of volatility. If you would invest 1,898 in Prudential Jennison Mid Cap on September 3, 2024 and sell it today you would earn a total of 647.00 from holding Prudential Jennison Mid Cap or generate 34.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Fund vs. Prudential Jennison Mid Cap
Performance |
| Timeline |
| Matthews China |
| Prudential Jennison Mid |
Matthews China and Prudential Jennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Prudential Jennison
The main advantage of trading using opposite Matthews China and Prudential Jennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Prudential Jennison 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 Prudential Jennison will offset losses from the drop in Prudential Jennison's long position.| Matthews China vs. Matthews Pacific Tiger | Matthews China vs. Matthews India Fund | Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews Asia Growth |
| Prudential Jennison vs. T Rowe Price | Prudential Jennison vs. Versatile Bond Portfolio | Prudential Jennison vs. Ms Global Fixed | Prudential Jennison vs. Ambrus Core Bond |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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