Correlation Between WBI BullBear and Matthews China

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

By analyzing existing cross correlation between WBI BullBear Quality and Matthews China Discovery, you can compare the effects of market volatilities on WBI BullBear and Matthews China 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 WBI BullBear with a short position of Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI BullBear and Matthews China.

Diversification Opportunities for WBI BullBear and Matthews China

-0.42

Correlation Coefficient

WBI BullBear  Matthews China

Very good diversification

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

Pair Corralation between WBI BullBear and Matthews China

Given the investment horizon of 90 days WBI BullBear Quality is expected to under-perform the Matthews China. But the etf apears to be less risky and, when comparing its historical volatility, WBI BullBear Quality is 1.88 times less risky than Matthews China. The etf trades about -0.27 of its potential returns per unit of risk. The Matthews China Discovery is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,539  in Matthews China Discovery on October 6, 2024 and sell it today you would lose (25.00) from holding Matthews China Discovery or give up 0.98% of portfolio value over 90 days.

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

WBI BullBear Quality  vs.  Matthews China Discovery

WBI BullBear Quality

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WBI BullBear Quality are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, WBI BullBear is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Matthews China Discovery

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with WBI BullBear and Matthews China

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

The idea behind WBI BullBear Quality and Matthews China Discovery 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 Transaction History module to view history of all your transactions and understand their impact on performance.