Correlation Between Vanguard Value and Matthews International
Can any of the company-specific risk be diversified away by investing in both Vanguard Value and Matthews International 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 Vanguard Value and Matthews International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and Matthews International Funds, you can compare the effects of market volatilities on Vanguard Value and Matthews International 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 Vanguard Value with a short position of Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Matthews International.
Diversification Opportunities for Vanguard Value and Matthews International
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Matthews is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Matthews International Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and Vanguard Value 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 Vanguard Value Index are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of Vanguard Value i.e., Vanguard Value and Matthews International go up and down completely randomly.
Pair Corralation between Vanguard Value and Matthews International
Considering the 90-day investment horizon Vanguard Value Index is expected to generate 0.55 times more return on investment than Matthews International. However, Vanguard Value Index is 1.8 times less risky than Matthews International. It trades about 0.22 of its potential returns per unit of risk. Matthews International Funds is currently generating about -0.13 per unit of risk. If you would invest 17,458 in Vanguard Value Index on August 29, 2024 and sell it today you would earn a total of 676.00 from holding Vanguard Value Index or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. Matthews International Funds
Performance |
| Timeline |
| Vanguard Value Index |
| Matthews International |
Vanguard Value and Matthews International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Matthews International
The main advantage of trading using opposite Vanguard Value and Matthews International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value position performs unexpectedly, Matthews International 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 International will offset losses from the drop in Matthews International's long position.| Vanguard Value vs. Vanguard Growth Index | Vanguard Value vs. Vanguard Small Cap Value | Vanguard Value vs. Vanguard Mid Cap Value | Vanguard Value vs. Vanguard Small Cap Index |
| Matthews International vs. Freedom Day Dividend | Matthews International vs. Davis Select International | Matthews International vs. iShares MSCI China | Matthews International vs. SmartETFs Dividend Builder |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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