Correlation Between Motley Fool and Matthews China
Can any of the company-specific risk be diversified away by investing in both Motley Fool 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 Motley Fool and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motley Fool Next and Matthews China Discovery, you can compare the effects of market volatilities on Motley Fool 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 Motley Fool with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motley Fool and Matthews China.
Diversification Opportunities for Motley Fool and Matthews China
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Motley and Matthews is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Motley Fool Next and Matthews China Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Discovery and Motley Fool 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 Motley Fool Next 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 Discovery has no effect on the direction of Motley Fool i.e., Motley Fool and Matthews China go up and down completely randomly.
Pair Corralation between Motley Fool and Matthews China
Given the investment horizon of 90 days Motley Fool Next is expected to generate 0.55 times more return on investment than Matthews China. However, Motley Fool Next is 1.82 times less risky than Matthews China. It trades about 0.41 of its potential returns per unit of risk. Matthews China Discovery is currently generating about -0.13 per unit of risk. If you would invest 1,874 in Motley Fool Next on August 29, 2024 and sell it today you would earn a total of 190.00 from holding Motley Fool Next or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Motley Fool Next vs. Matthews China Discovery
Performance |
| Timeline |
| Motley Fool Next |
| Matthews China Discovery |
Motley Fool and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motley Fool and Matthews China
The main advantage of trading using opposite Motley Fool and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motley Fool 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.| Motley Fool vs. BlackRock Future Health | Motley Fool vs. Global X Thematic | Motley Fool vs. Aquagold International | Motley Fool vs. Morningstar Unconstrained Allocation |
| Matthews China vs. Matthews Emerging Markets | Matthews China vs. Neuberger Berman ETF | Matthews China vs. Fidelity Small Mid Cap | Matthews China vs. Professionally Managed Portfolios |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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