Correlation Between Matthews Asia and Fidelity Japan
Can any of the company-specific risk be diversified away by investing in both Matthews Asia 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 Asia 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 Asia Dividend and Fidelity Japan Smaller, you can compare the effects of market volatilities on Matthews Asia 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 Asia with a short position of Fidelity Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Asia and Fidelity Japan.
Diversification Opportunities for Matthews Asia and Fidelity Japan
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Fidelity is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Asia Dividend 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 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 Dividend 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 Asia i.e., Matthews Asia and Fidelity Japan go up and down completely randomly.
Pair Corralation between Matthews Asia and Fidelity Japan
Assuming the 90 days horizon Matthews Asia is expected to generate 2.34 times less return on investment than Fidelity Japan. But when comparing it to its historical volatility, Matthews Asia Dividend is 1.51 times less risky than Fidelity Japan. It trades about 0.07 of its potential returns per unit of risk. Fidelity Japan Smaller is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,650 in Fidelity Japan Smaller on September 13, 2024 and sell it today you would earn a total of 37.00 from holding Fidelity Japan Smaller or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Asia Dividend vs. Fidelity Japan Smaller
Performance |
| Timeline |
| Matthews Asia Dividend |
| Fidelity Japan Smaller |
Matthews Asia and Fidelity Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Asia and Fidelity Japan
The main advantage of trading using opposite Matthews Asia and Fidelity Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Asia 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 Asia vs. Matthews Pacific Tiger | Matthews Asia vs. Sit Dividend Growth | Matthews Asia vs. Harbor Vertible Securities | Matthews Asia vs. Jpmorgan Unconstrained Debt |
| Fidelity Japan vs. Fidelity Freedom 2015 | Fidelity Japan vs. Fidelity Puritan Fund | Fidelity Japan vs. Fidelity Puritan Fund | Fidelity Japan vs. Fidelity Pennsylvania Municipal |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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