Correlation Between Matthews China and Litman Gregory
Can any of the company-specific risk be diversified away by investing in both Matthews China and Litman Gregory 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 Litman Gregory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matthews China Discovery and Litman Gregory Funds, you can compare the effects of market volatilities on Matthews China and Litman Gregory 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 Litman Gregory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matthews China and Litman Gregory.
Diversification Opportunities for Matthews China and Litman Gregory
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Matthews and Litman is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Matthews China Discovery and Litman Gregory Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litman Gregory Funds 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 Discovery are associated (or correlated) with Litman Gregory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litman Gregory Funds has no effect on the direction of Matthews China i.e., Matthews China and Litman Gregory go up and down completely randomly.
Pair Corralation between Matthews China and Litman Gregory
Given the investment horizon of 90 days Matthews China Discovery is expected to generate 1.6 times more return on investment than Litman Gregory. However, Matthews China is 1.6 times more volatile than Litman Gregory Funds. It trades about 0.02 of its potential returns per unit of risk. Litman Gregory Funds is currently generating about -0.04 per unit of risk. If you would invest 3,272 in Matthews China Discovery on August 19, 2025 and sell it today you would earn a total of 38.90 from holding Matthews China Discovery or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matthews China Discovery vs. Litman Gregory Funds
Performance |
| Timeline |
| Matthews China Discovery |
| Litman Gregory Funds |
Matthews China and Litman Gregory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matthews China and Litman Gregory
The main advantage of trading using opposite Matthews China and Litman Gregory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matthews China position performs unexpectedly, Litman Gregory 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 Litman Gregory will offset losses from the drop in Litman Gregory's long position.| Matthews China vs. AdvisorShares Hotel ETF | Matthews China vs. Spinnaker ETF Series | Matthews China vs. Litman Gregory Funds | Matthews China vs. Ocean Park International |
| Litman Gregory vs. Pacer Funds Trust | Litman Gregory vs. Matthews China Discovery | Litman Gregory vs. AdvisorShares Hotel ETF | Litman Gregory vs. Spinnaker ETF Series |
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 CEOs Directory module to screen CEOs from public companies around the world.
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