Correlation Between Vanguard Minimum and Matthews International

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

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

Diversification Opportunities for Vanguard Minimum and Matthews International

0.58

Correlation Coefficient

Vanguard Minimum  Matthews International

Very weak diversification

The 3 months correlation between Vanguard and Matthews is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Minimum Volatility and Matthews International Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews International and Vanguard Minimum 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 Vanguard Minimum Volatility are associated (or correlated) with Matthews International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews International has no effect on the direction of Vanguard Minimum i.e., Vanguard Minimum and Matthews International go up and down completely randomly.

Pair Corralation between Vanguard Minimum and Matthews International

Given the investment horizon of 90 days Vanguard Minimum Volatility is expected to generate 0.54 times more return on investment than Matthews International. However, Vanguard Minimum Volatility is 1.86 times less risky than Matthews International. It trades about 0.12 of its potential returns per unit of risk. Matthews International Funds is currently generating about 0.02 per unit of risk. If you would invest  9,136  in Vanguard Minimum Volatility on December 2, 2024 and sell it today you would earn a total of  3,670  from holding Vanguard Minimum Volatility or generate 40.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	72.93%
Values	Daily Returns

Vanguard Minimum Volatility  vs.  Matthews International Funds

Vanguard Minimum Vol

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Minimum Volatility are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Matthews International

Risk-Adjusted Performance

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 somewhat strong forward indicators, Matthews International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Minimum and Matthews International

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

The idea behind Vanguard Minimum Volatility and Matthews International Funds 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.