Correlation Between Matthews Japan and Rmb Japan
Can any of the company-specific risk be diversified away by investing in both Matthews Japan and Rmb 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 Rmb 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 Rmb Japan Fund, you can compare the effects of market volatilities on Matthews Japan and Rmb 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 Rmb Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews Japan and Rmb Japan.
Diversification Opportunities for Matthews Japan and Rmb Japan
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matthews and Rmb is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Matthews Japan Fund and Rmb Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rmb Japan Fund 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 Rmb Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rmb Japan Fund has no effect on the direction of Matthews Japan i.e., Matthews Japan and Rmb Japan go up and down completely randomly.
Pair Corralation between Matthews Japan and Rmb Japan
Assuming the 90 days horizon Matthews Japan Fund is expected to generate 1.01 times more return on investment than Rmb Japan. However, Matthews Japan is 1.01 times more volatile than Rmb Japan Fund. It trades about 0.02 of its potential returns per unit of risk. Rmb Japan Fund is currently generating about 0.0 per unit of risk. If you would invest 1,990 in Matthews Japan Fund on September 1, 2024 and sell it today you would earn a total of 44.00 from holding Matthews Japan Fund or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Matthews Japan Fund vs. Rmb Japan Fund
Performance |
| Timeline |
| Matthews Japan |
| Rmb Japan Fund |
Matthews Japan and Rmb Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews Japan and Rmb Japan
The main advantage of trading using opposite Matthews Japan and Rmb Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews Japan position performs unexpectedly, Rmb 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 Rmb Japan will offset losses from the drop in Rmb Japan'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 |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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