Correlation Between Mfs Prudent and Mfs Emerging
Can any of the company-specific risk be diversified away by investing in both Mfs Prudent and Mfs 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 Prudent and Mfs Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Prudent Investor and Mfs Emerging Markets, you can compare the effects of market volatilities on Mfs Prudent and Mfs 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 Prudent with a short position of Mfs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Prudent and Mfs Emerging.
Diversification Opportunities for Mfs Prudent and Mfs Emerging
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Mfs is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Prudent Investor and Mfs Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Emerging Markets and Mfs Prudent 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 Prudent Investor are associated (or correlated) with Mfs Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Emerging Markets has no effect on the direction of Mfs Prudent i.e., Mfs Prudent and Mfs Emerging go up and down completely randomly.
Pair Corralation between Mfs Prudent and Mfs Emerging
Assuming the 90 days horizon Mfs Prudent Investor is expected to generate 1.0 times more return on investment than Mfs Emerging. However, Mfs Prudent Investor is 1.0 times less risky than Mfs Emerging. It trades about 0.06 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.03 per unit of risk. If you would invest 1,171 in Mfs Prudent Investor on September 1, 2024 and sell it today you would earn a total of 34.00 from holding Mfs Prudent Investor or generate 2.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Mfs Prudent Investor vs. Mfs Emerging Markets
Performance |
| Timeline |
| Mfs Prudent Investor |
| Mfs Emerging Markets |
Mfs Prudent and Mfs Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Prudent and Mfs Emerging
The main advantage of trading using opposite Mfs Prudent and Mfs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Prudent position performs unexpectedly, Mfs 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 Mfs Emerging will offset losses from the drop in Mfs Emerging's long position.| Mfs Prudent vs. Maryland Short Term Tax Free | Mfs Prudent vs. Barings Active Short | Mfs Prudent vs. The Short Term | Mfs Prudent vs. Aqr Long Short Equity |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |