Correlation Between Stadion Tactical and Matthews China

Can any of the company-specific risk be diversified away by investing in both Stadion Tactical 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 Stadion Tactical and Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stadion Tactical Growth and Matthews China Fund, you can compare the effects of market volatilities on Stadion Tactical 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 Stadion Tactical with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stadion Tactical and Matthews China.

Diversification Opportunities for Stadion Tactical and Matthews China

-0.2

Correlation Coefficient

Stadion Tactical  Matthews China

Good diversification

The 3 months correlation between Stadion and Matthews is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stadion Tactical Growth and Matthews China Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China and Stadion Tactical 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 Stadion Tactical Growth 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 has no effect on the direction of Stadion Tactical i.e., Stadion Tactical and Matthews China go up and down completely randomly.

Pair Corralation between Stadion Tactical and Matthews China

Assuming the 90 days horizon Stadion Tactical Growth is expected to under-perform the Matthews China. But the mutual fund apears to be less risky and, when comparing its historical volatility, Stadion Tactical Growth is 4.36 times less risky than Matthews China. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Matthews China Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,271  in Matthews China Fund on September 24, 2024 and sell it today you would earn a total of  83.00  from holding Matthews China Fund or generate 6.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Stadion Tactical Growth  vs.  Matthews China Fund

Stadion Tactical Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stadion Tactical Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Stadion Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Matthews China

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Matthews China may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Stadion Tactical and Matthews China

The main advantage of trading using opposite Stadion Tactical and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stadion Tactical 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.

The idea behind Stadion Tactical Growth and Matthews China Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.