Correlation Between Matthews India and Matthews Japan
Can any of the company-specific risk be diversified away by investing in both Matthews India and Matthews Japan 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 India and Matthews Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews India Fund and Matthews Japan Fund, you can compare the effects of market volatilities on Matthews India and Matthews Japan 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 India with a short position of Matthews Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews India and Matthews Japan.
Diversification Opportunities for Matthews India and Matthews Japan
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Matthews and Matthews is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Matthews India Fund and Matthews Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Japan and Matthews India 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 India Fund are associated (or correlated) with Matthews Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Japan has no effect on the direction of Matthews India i.e., Matthews India and Matthews Japan go up and down completely randomly.
Pair Corralation between Matthews India and Matthews Japan
Assuming the 90 days horizon Matthews India Fund is expected to under-perform the Matthews Japan. In addition to that, Matthews India is 1.18 times more volatile than Matthews Japan Fund. It trades about -0.08 of its total potential returns per unit of risk. Matthews Japan Fund is currently generating about 0.24 per unit of volatility. If you would invest 1,947 in Matthews Japan Fund on November 10, 2024 and sell it today you would earn a total of 84.00 from holding Matthews Japan Fund or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Matthews India Fund vs. Matthews Japan Fund
Performance |
| Timeline |
| Matthews India |
| Matthews Japan |
Matthews India and Matthews Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews India and Matthews Japan
The main advantage of trading using opposite Matthews India and Matthews Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews India position performs unexpectedly, Matthews Japan 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 Japan will offset losses from the drop in Matthews Japan's long position.| Matthews India vs. Alpskotak India Growth | Matthews India vs. Emerald Banking And | Matthews India vs. Oil Gas Ultrasector | Matthews India vs. Matthews Japan Fund |
| Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews India Fund | Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews Asia Dividend |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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