Correlation Between Matthews China and IShares Core

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Can any of the company-specific risk be diversified away by investing in both Matthews China and IShares Core 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 IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Discovery and iShares Core SP, you can compare the effects of market volatilities on Matthews China and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and IShares Core.

Diversification Opportunities for Matthews China and IShares Core

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Matthews and IShares is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 Discovery are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Matthews China i.e., Matthews China and IShares Core go up and down completely randomly.

Pair Corralation between Matthews China and IShares Core

Given the investment horizon of 90 days Matthews China Discovery is expected to generate 2.08 times more return on investment than IShares Core. However, Matthews China is 2.08 times more volatile than iShares Core SP. It trades about -0.04 of its potential returns per unit of risk. iShares Core SP is currently generating about -0.25 per unit of risk. If you would invest  2,566  in Matthews China Discovery on October 7, 2024 and sell it today you would lose (52.00) from holding Matthews China Discovery or give up 2.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Matthews China Discovery  vs.  iShares Core SP

 Performance 
       Timeline  
Matthews China Discovery 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Matthews China Discovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's technical indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.
iShares Core SP 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward-looking indicators, IShares Core is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Matthews China and IShares Core Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Matthews China and IShares Core

The main advantage of trading using opposite Matthews China and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.
The idea behind Matthews China Discovery and iShares Core SP 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.
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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