Correlation Between Mfs Emerging and Gmo Small
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Gmo Small 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 Gmo Small 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 Gmo Small Cap, you can compare the effects of market volatilities on Mfs Emerging and Gmo Small 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 Gmo Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Gmo Small.
Diversification Opportunities for Mfs Emerging and Gmo Small
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mfs and Gmo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Gmo Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Small Cap 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 Gmo Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Small Cap has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Gmo Small go up and down completely randomly.
Pair Corralation between Mfs Emerging and Gmo Small
Assuming the 90 days horizon Mfs Emerging Markets is expected to under-perform the Gmo Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs Emerging Markets is 3.17 times less risky than Gmo Small. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Gmo Small Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,604 in Gmo Small Cap on August 30, 2024 and sell it today you would earn a total of 148.00 from holding Gmo Small Cap or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Emerging Markets vs. Gmo Small Cap
Performance |
| Timeline |
| Mfs Emerging Markets |
| Gmo Small Cap |
Mfs Emerging and Gmo Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Gmo Small
The main advantage of trading using opposite Mfs Emerging and Gmo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Gmo Small 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 Gmo Small will offset losses from the drop in Gmo Small's long position.| Mfs Emerging vs. Ancorathelen Small Mid Cap | Mfs Emerging vs. Eip Growth And | Mfs Emerging vs. Growth Fund Of | Mfs Emerging vs. Small Midcap Dividend Income |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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