Correlation Between Matthews India and Matthews Asia
Can any of the company-specific risk be diversified away by investing in both Matthews India and Matthews Asia 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 Asia 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 Asia Innovators, you can compare the effects of market volatilities on Matthews India and Matthews Asia 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 Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews India and Matthews Asia.
Diversification Opportunities for Matthews India and Matthews Asia
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matthews and Matthews is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Matthews India Fund and Matthews Asia Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Innovators 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 Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asia Innovators has no effect on the direction of Matthews India i.e., Matthews India and Matthews Asia go up and down completely randomly.
Pair Corralation between Matthews India and Matthews Asia
Assuming the 90 days horizon Matthews India Fund is expected to under-perform the Matthews Asia. In addition to that, Matthews India is 1.13 times more volatile than Matthews Asia Innovators. It trades about -0.26 of its total potential returns per unit of risk. Matthews Asia Innovators is currently generating about -0.14 per unit of volatility. If you would invest 1,326 in Matthews Asia Innovators on October 23, 2024 and sell it today you would lose (34.00) from holding Matthews Asia Innovators or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews India Fund vs. Matthews Asia Innovators
Performance |
| Timeline |
| Matthews India |
| Matthews Asia Innovators |
Matthews India and Matthews Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews India and Matthews Asia
The main advantage of trading using opposite Matthews India and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews India position performs unexpectedly, Matthews Asia 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 Asia will offset losses from the drop in Matthews Asia's long position.| Matthews India vs. Matthews China Fund | Matthews India vs. Matthews Pacific Tiger | Matthews India vs. Eaton Vance Greater | Matthews India vs. Morgan Stanley India |
| Matthews Asia vs. Matthews Asian Growth | Matthews Asia vs. Matthews China Fund | Matthews Asia vs. Matthews India Fund | Matthews Asia 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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