Correlation Between Matthews Japan and Fidelity Japan
Can any of the company-specific risk be diversified away by investing in both Matthews Japan and Fidelity 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 Japan and Fidelity Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Japan Fund and Fidelity Japan Smaller, you can compare the effects of market volatilities on Matthews Japan and Fidelity 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 Japan with a short position of Fidelity Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Japan and Fidelity Japan.
Diversification Opportunities for Matthews Japan and Fidelity Japan
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matthews and Fidelity is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Japan Fund and Fidelity Japan Smaller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Japan Smaller and Matthews Japan 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 Japan Fund are associated (or correlated) with Fidelity Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Japan Smaller has no effect on the direction of Matthews Japan i.e., Matthews Japan and Fidelity Japan go up and down completely randomly.
Pair Corralation between Matthews Japan and Fidelity Japan
Assuming the 90 days horizon Matthews Japan is expected to generate 2.74 times less return on investment than Fidelity Japan. In addition to that, Matthews Japan is 1.18 times more volatile than Fidelity Japan Smaller. It trades about 0.01 of its total potential returns per unit of risk. Fidelity Japan Smaller is currently generating about 0.02 per unit of volatility. If you would invest 1,681 in Fidelity Japan Smaller on September 12, 2024 and sell it today you would earn a total of 16.00 from holding Fidelity Japan Smaller or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Japan Fund vs. Fidelity Japan Smaller
Performance |
| Timeline |
| Matthews Japan |
| Fidelity Japan Smaller |
Matthews Japan and Fidelity Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Japan and Fidelity Japan
The main advantage of trading using opposite Matthews Japan and Fidelity Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Japan position performs unexpectedly, Fidelity 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 Fidelity Japan will offset losses from the drop in Fidelity Japan's long position.| Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews India Fund | Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews Asia Dividend |
| Fidelity Japan vs. Hennessy Japan Fund | Fidelity Japan vs. Matthews India Fund | Fidelity Japan vs. Hennessy Japan Fund | Fidelity 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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