Correlation Between T Rowe and Matthews China
Can any of the company-specific risk be diversified away by investing in both T Rowe and Matthews China 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 T Rowe and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rowe Price and Matthews China Small, you can compare the effects of market volatilities on T Rowe and Matthews China 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 T Rowe with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Matthews China.
Diversification Opportunities for T Rowe and Matthews China
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between TCELX and Matthews is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Matthews China Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Small and T Rowe 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 T Rowe Price are associated (or correlated) with Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China Small has no effect on the direction of T Rowe i.e., T Rowe and Matthews China go up and down completely randomly.
Pair Corralation between T Rowe and Matthews China
Assuming the 90 days horizon T Rowe Price is expected to under-perform the Matthews China. In addition to that, T Rowe is 1.01 times more volatile than Matthews China Small. It trades about -0.26 of its total potential returns per unit of risk. Matthews China Small is currently generating about -0.23 per unit of volatility. If you would invest 954.00 in Matthews China Small on August 29, 2024 and sell it today you would lose (70.00) from holding Matthews China Small or give up 7.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
T Rowe Price vs. Matthews China Small
Performance |
| Timeline |
| T Rowe Price |
| Matthews China Small |
T Rowe and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with T Rowe and Matthews China
The main advantage of trading using opposite T Rowe and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Matthews China 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 China will offset losses from the drop in Matthews China's long position.| T Rowe vs. Matthews China Dividend | T Rowe vs. Matthews China Fund | T Rowe vs. Matthews China Small | T Rowe vs. Aquagold International |
| Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews Asia Innovators | Matthews China vs. Matthews Asia Small | Matthews China vs. Matthews China Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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