Correlation Between Matthews Asia and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Matthews Asia and SPDR SP 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 Asia and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews Asia Innovators and SPDR SP Emerging, you can compare the effects of market volatilities on Matthews Asia and SPDR SP 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 Asia with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asia and SPDR SP.
Diversification Opportunities for Matthews Asia and SPDR SP
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matthews and SPDR is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asia Innovators and SPDR SP Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Emerging and Matthews Asia 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 Asia Innovators are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Emerging has no effect on the direction of Matthews Asia i.e., Matthews Asia and SPDR SP go up and down completely randomly.
Pair Corralation between Matthews Asia and SPDR SP
Given the investment horizon of 90 days Matthews Asia Innovators is expected to generate 1.26 times more return on investment than SPDR SP. However, Matthews Asia is 1.26 times more volatile than SPDR SP Emerging. It trades about -0.07 of its potential returns per unit of risk. SPDR SP Emerging is currently generating about -0.19 per unit of risk. If you would invest 2,868 in Matthews Asia Innovators on August 28, 2024 and sell it today you would lose (62.00) from holding Matthews Asia Innovators or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Asia Innovators vs. SPDR SP Emerging
Performance |
| Timeline |
| Matthews Asia Innovators |
| SPDR SP Emerging |
Matthews Asia and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asia and SPDR SP
The main advantage of trading using opposite Matthews Asia and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asia position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP's long position.| Matthews Asia vs. Matthews China Active | Matthews Asia vs. MAYBANK EMERGING ETF | Matthews Asia vs. Matthews Emerging Markets | Matthews Asia vs. JP Morgan Exchange Traded |
| SPDR SP vs. Matthews China Active | SPDR SP vs. MAYBANK EMERGING ETF | SPDR SP vs. Matthews Emerging Markets | SPDR SP vs. JP Morgan Exchange Traded |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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