Correlation Between Matthews China and Baron Global

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

By analyzing existing cross correlation between Matthews China Small and Baron Global Advantage, you can compare the effects of market volatilities on Matthews China and Baron Global 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 Baron Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Baron Global.

Diversification Opportunities for Matthews China and Baron Global

-0.51

Correlation Coefficient

Matthews China  Baron Global

Excellent diversification

The 3 months correlation between Matthews and Baron is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Small and Baron Global Advantage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Global Advantage 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 Small are associated (or correlated) with Baron Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Global Advantage has no effect on the direction of Matthews China i.e., Matthews China and Baron Global go up and down completely randomly.

Pair Corralation between Matthews China and Baron Global

Assuming the 90 days horizon Matthews China Small is expected to generate 0.79 times more return on investment than Baron Global. However, Matthews China Small is 1.27 times less risky than Baron Global. It trades about 0.12 of its potential returns per unit of risk. Baron Global Advantage is currently generating about -0.08 per unit of risk. If you would invest  912.00  in Matthews China Small on December 29, 2024 and sell it today you would earn a total of  89.00  from holding Matthews China Small or generate 9.76% return on investment over 90 days.

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

Matthews China Small  vs.  Baron Global Advantage

Matthews China Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews China Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Matthews China may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Baron Global Advantage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Baron Global Advantage has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Matthews China and Baron Global

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

The idea behind Matthews China Small and Baron Global Advantage 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..