Correlation Between T Rowe and Matthews Asian

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

By analyzing existing cross correlation between T Rowe Price and Matthews Asian Growth, you can compare the effects of market volatilities on T Rowe and Matthews Asian 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 T Rowe with a short position of Matthews Asian. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rowe and Matthews Asian.

Diversification Opportunities for T Rowe and Matthews Asian

0.63

Correlation Coefficient

T Rowe  Matthews Asian

Poor diversification

The 3 months correlation between PRLAX and Matthews is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Matthews Asian Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Asian Growth and T Rowe 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 T Rowe Price are associated (or correlated) with Matthews Asian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Asian Growth has no effect on the direction of T Rowe i.e., T Rowe and Matthews Asian go up and down completely randomly.

Pair Corralation between T Rowe and Matthews Asian

Assuming the 90 days horizon T Rowe Price is expected to under-perform the Matthews Asian. In addition to that, T Rowe is 2.63 times more volatile than Matthews Asian Growth. It trades about -0.3 of its total potential returns per unit of risk. Matthews Asian Growth is currently generating about -0.13 per unit of volatility. If you would invest  1,364  in Matthews Asian Growth on October 7, 2024 and sell it today you would lose (29.00) from holding Matthews Asian Growth or give up 2.13% of portfolio value over 90 days.

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

T Rowe Price  vs.  Matthews Asian Growth

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Matthews Asian Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Matthews Asian Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 T Rowe and Matthews Asian

The main advantage of trading using opposite T Rowe and Matthews Asian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe position performs unexpectedly, Matthews Asian 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 Asian will offset losses from the drop in Matthews Asian's long position.

The idea behind T Rowe Price and Matthews Asian Growth 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.