Correlation Between Matthews Asian and Baron New
Can any of the company-specific risk be diversified away by investing in both Matthews Asian and Baron New 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 Asian and Baron New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Asian Growth and Baron New Asia, you can compare the effects of market volatilities on Matthews Asian and Baron New 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 Asian with a short position of Baron New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asian and Baron New.
Diversification Opportunities for Matthews Asian and Baron New
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Baron is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asian Growth and Baron New Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron New Asia and Matthews Asian 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 Asian Growth are associated (or correlated) with Baron New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron New Asia has no effect on the direction of Matthews Asian i.e., Matthews Asian and Baron New go up and down completely randomly.
Pair Corralation between Matthews Asian and Baron New
Assuming the 90 days horizon Matthews Asian is expected to generate 1.68 times less return on investment than Baron New. But when comparing it to its historical volatility, Matthews Asian Growth is 1.1 times less risky than Baron New. It trades about 0.03 of its potential returns per unit of risk. Baron New Asia is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 764.00 in Baron New Asia on September 4, 2024 and sell it today you would earn a total of 158.00 from holding Baron New Asia or generate 20.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.16% |
| Values | Daily Returns |
Matthews Asian Growth vs. Baron New Asia
Performance |
| Timeline |
| Matthews Asian Growth |
| Baron New Asia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Matthews Asian and Baron New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asian and Baron New
The main advantage of trading using opposite Matthews Asian and Baron New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asian position performs unexpectedly, Baron New 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 Baron New will offset losses from the drop in Baron New's long position.| Matthews Asian vs. Franklin High Yield | Matthews Asian vs. California High Yield Municipal | Matthews Asian vs. Bbh Intermediate Municipal | Matthews Asian vs. Victory High Income |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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