Correlation Between Matthews International and Vanguard Minimum

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

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

Diversification Opportunities for Matthews International and Vanguard Minimum

-0.32

Correlation Coefficient

Matthews International  Vanguard Minimum

Very good diversification

The 3 months correlation between Matthews and Vanguard is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International Funds and Vanguard Minimum Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Minimum Vol and Matthews International 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 International Funds are associated (or correlated) with Vanguard Minimum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Minimum Vol has no effect on the direction of Matthews International i.e., Matthews International and Vanguard Minimum go up and down completely randomly.

Pair Corralation between Matthews International and Vanguard Minimum

Given the investment horizon of 90 days Matthews International Funds is expected to under-perform the Vanguard Minimum. In addition to that, Matthews International is 1.52 times more volatile than Vanguard Minimum Volatility. It trades about -0.29 of its total potential returns per unit of risk. Vanguard Minimum Volatility is currently generating about -0.29 per unit of volatility. If you would invest  12,476  in Vanguard Minimum Volatility on October 9, 2024 and sell it today you would lose (450.00) from holding Vanguard Minimum Volatility or give up 3.61% of portfolio value over 90 days.

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

Matthews International Funds  vs.  Vanguard Minimum Volatility

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. Despite latest abnormal performance, the Etf's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Vanguard Minimum Vol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard Minimum Volatility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable primary indicators, Vanguard Minimum is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Matthews International and Vanguard Minimum

The main advantage of trading using opposite Matthews International and Vanguard Minimum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews International position performs unexpectedly, Vanguard Minimum 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 Vanguard Minimum will offset losses from the drop in Vanguard Minimum's long position.

The idea behind Matthews International Funds and Vanguard Minimum Volatility 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.