Correlation Between Mfs Emerging and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Transamerica Emerging 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 Mfs Emerging and Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Emerging Markets and Transamerica Emerging Markets, you can compare the effects of market volatilities on Mfs Emerging and Transamerica Emerging 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 Mfs Emerging with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Transamerica Emerging.
Diversification Opportunities for Mfs Emerging and Transamerica Emerging
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mfs and Transamerica is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Mfs Emerging 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 Mfs Emerging Markets are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Mfs Emerging and Transamerica Emerging
Assuming the 90 days horizon Mfs Emerging is expected to generate 1.24 times less return on investment than Transamerica Emerging. But when comparing it to its historical volatility, Mfs Emerging Markets is 1.88 times less risky than Transamerica Emerging. It trades about 0.04 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 734.00 in Transamerica Emerging Markets on September 4, 2024 and sell it today you would earn a total of 67.00 from holding Transamerica Emerging Markets or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mfs Emerging Markets vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Mfs Emerging Markets |
| Transamerica Emerging |
Mfs Emerging and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Transamerica Emerging
The main advantage of trading using opposite Mfs Emerging and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Transamerica Emerging 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's long position.| Mfs Emerging vs. Mfs Prudent Investor | Mfs Emerging vs. Mfs Prudent Investor | Mfs Emerging vs. Mfs Prudent Investor | Mfs Emerging vs. Mfs Prudent Investor |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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