Correlation Between Matthews International and First Trust
Can any of the company-specific risk be diversified away by investing in both Matthews International and First Trust 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 International and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews International Funds and First Trust Exchange Traded, you can compare the effects of market volatilities on Matthews International and First Trust 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 International with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews International and First Trust.
Diversification Opportunities for Matthews International and First Trust
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Matthews and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International Funds and First Trust Exchange Traded in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Exchange and Matthews International 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 International Funds are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Exchange has no effect on the direction of Matthews International i.e., Matthews International and First Trust go up and down completely randomly.
Pair Corralation between Matthews International and First Trust
Given the investment horizon of 90 days Matthews International is expected to generate 1.94 times less return on investment than First Trust. But when comparing it to its historical volatility, Matthews International Funds is 1.7 times less risky than First Trust. It trades about 0.08 of its potential returns per unit of risk. First Trust Exchange Traded is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,049 in First Trust Exchange Traded on August 18, 2025 and sell it today you would earn a total of 241.00 from holding First Trust Exchange Traded or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews International Funds vs. First Trust Exchange Traded
Performance |
| Timeline |
| Matthews International |
| First Trust Exchange |
Matthews International and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews International and First Trust
The main advantage of trading using opposite Matthews International and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews International position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Matthews International vs. SPDR SP Kensho | Matthews International vs. Innovator Hedged Nasdaq 100 | Matthews International vs. The Advisors Inner | Matthews International vs. Siren DIVCON Dividend |
| First Trust vs. EGSHARES BLUE CHIP | First Trust vs. Soundwatch Hedged Equity | First Trust vs. iShares Nasdaq Top | First Trust vs. OShares Global Internet |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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