Correlation Between Matthews Japan and Matthews Asia
Can any of the company-specific risk be diversified away by investing in both Matthews Japan 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 Japan 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 Japan Fund and Matthews Asia Dividend, you can compare the effects of market volatilities on Matthews Japan 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 Japan with a short position of Matthews Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Japan and Matthews Asia.
Diversification Opportunities for Matthews Japan and Matthews Asia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and Matthews is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Japan Fund and Matthews Asia Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asia Dividend 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 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 Dividend has no effect on the direction of Matthews Japan i.e., Matthews Japan and Matthews Asia go up and down completely randomly.
Pair Corralation between Matthews Japan and Matthews Asia
Assuming the 90 days horizon Matthews Japan Fund is expected to generate 1.06 times more return on investment than Matthews Asia. However, Matthews Japan is 1.06 times more volatile than Matthews Asia Dividend. It trades about 0.07 of its potential returns per unit of risk. Matthews Asia Dividend is currently generating about -0.15 per unit of risk. If you would invest 2,009 in Matthews Japan Fund on August 29, 2024 and sell it today you would earn a total of 24.00 from holding Matthews Japan Fund or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews Japan Fund vs. Matthews Asia Dividend
Performance |
| Timeline |
| Matthews Japan |
| Matthews Asia Dividend |
Matthews Japan and Matthews Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Japan and Matthews Asia
The main advantage of trading using opposite Matthews Japan and Matthews Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Japan 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 Japan vs. Matthews Asia Growth | Matthews Japan vs. Matthews Asia Innovators | Matthews Japan vs. Matthews Pacific Tiger | Matthews Japan vs. Matthews Asian Growth |
| Matthews Asia vs. Matthews Pacific Tiger | Matthews Asia vs. Sit Dividend Growth | Matthews Asia vs. Harbor Vertible Securities | Matthews Asia vs. Jpmorgan Unconstrained Debt |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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