Correlation Between Matthews China and Thrivent High

Can any of the company-specific risk be diversified away by investing in both Matthews China and Thrivent High 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 Thrivent High 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 Thrivent High Yield, you can compare the effects of market volatilities on Matthews China and Thrivent High 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 Thrivent High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Thrivent High.

Diversification Opportunities for Matthews China and Thrivent High

0.6

Correlation Coefficient

Matthews China  Thrivent High

Poor diversification

The 3 months correlation between Matthews and Thrivent is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Fund and Thrivent High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent High Yield 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 Thrivent High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent High Yield has no effect on the direction of Matthews China i.e., Matthews China and Thrivent High go up and down completely randomly.

Pair Corralation between Matthews China and Thrivent High

Assuming the 90 days horizon Matthews China Fund is expected to generate 7.42 times more return on investment than Thrivent High. However, Matthews China is 7.42 times more volatile than Thrivent High Yield. It trades about 0.11 of its potential returns per unit of risk. Thrivent High Yield is currently generating about 0.09 per unit of risk. If you would invest  1,349  in Matthews China Fund on December 30, 2024 and sell it today you would earn a total of  141.00  from holding Matthews China Fund or generate 10.45% return on investment over 90 days.

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

Matthews China Fund  vs.  Thrivent High Yield

Matthews China

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Fund are ranked lower than 8 (%) 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 April 2025.

Thrivent High Yield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent High Yield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thrivent High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Matthews China and Thrivent High

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

The idea behind Matthews China Fund and Thrivent High Yield 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.