Correlation Between Matthews China and World Energy
Can any of the company-specific risk be diversified away by investing in both Matthews China and World Energy 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 China and World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Fund and World Energy Fund, you can compare the effects of market volatilities on Matthews China and World Energy 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 China with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and World Energy.
Diversification Opportunities for Matthews China and World Energy
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Matthews and World is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Matthews China 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 China Fund are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Matthews China i.e., Matthews China and World Energy go up and down completely randomly.
Pair Corralation between Matthews China and World Energy
Assuming the 90 days horizon Matthews China Fund is expected to generate 2.53 times more return on investment than World Energy. However, Matthews China is 2.53 times more volatile than World Energy Fund. It trades about 0.05 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.05 per unit of risk. 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 |
Matthews China Fund vs. World Energy Fund
Performance |
Timeline |
Matthews China |
World Energy |
Matthews China and World Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Matthews China and World Energy
The main advantage of trading using opposite Matthews China and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.Matthews China vs. Matthews India Fund | Matthews China vs. Matthews Asian Growth | Matthews China vs. Guinness Atkinson China | Matthews China vs. Oberweis China Opportunities |
World Energy vs. Bond Fund Investor | World Energy vs. Strategic Enhanced Yield | World Energy vs. Cavanal Hill Hedged | World Energy vs. Limited Duration 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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