Correlation Between Invesco India and Matthews International

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

By analyzing existing cross correlation between Invesco India ETF and Matthews International Funds, you can compare the effects of market volatilities on Invesco India 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 Invesco India with a short position of Matthews International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco India and Matthews International.

Diversification Opportunities for Invesco India and Matthews International

0.99

Correlation Coefficient

Invesco India  Matthews International

No risk reduction

The 3 months correlation between Invesco and Matthews is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Invesco India ETF and Matthews International Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and Invesco India 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 Invesco India ETF 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 Invesco India i.e., Invesco India and Matthews International go up and down completely randomly.

Pair Corralation between Invesco India and Matthews International

Considering the 90-day investment horizon Invesco India ETF is expected to generate 0.93 times more return on investment than Matthews International. However, Invesco India ETF is 1.08 times less risky than Matthews International. It trades about -0.09 of its potential returns per unit of risk. Matthews International Funds is currently generating about -0.08 per unit of risk. If you would invest  3,020  in Invesco India ETF on August 30, 2024 and sell it today you would lose (147.00) from holding Invesco India ETF or give up 4.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Invesco India ETF  vs.  Matthews International Funds

Invesco India ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco India ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Invesco India is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Matthews International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews International Funds has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Matthews International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Invesco India and Matthews International

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

The idea behind Invesco India ETF and Matthews International Funds 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.