Correlation Between Mfs Growth and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Mfs Growth 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 Growth 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 Growth Allocation and Transamerica Emerging Markets, you can compare the effects of market volatilities on Mfs Growth 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 Growth with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Growth and Transamerica Emerging.
Diversification Opportunities for Mfs Growth and Transamerica Emerging
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Transamerica is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Growth Allocation 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 Growth 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 Growth Allocation 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 Growth i.e., Mfs Growth and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Mfs Growth and Transamerica Emerging
Assuming the 90 days horizon Mfs Growth Allocation is expected to generate 0.67 times more return on investment than Transamerica Emerging. However, Mfs Growth Allocation is 1.48 times less risky than Transamerica Emerging. It trades about 0.14 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about -0.17 per unit of risk. If you would invest 2,441 in Mfs Growth Allocation on August 26, 2024 and sell it today you would earn a total of 37.00 from holding Mfs Growth Allocation or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Growth Allocation vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Mfs Growth Allocation |
| Transamerica Emerging |
Mfs Growth and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Growth and Transamerica Emerging
The main advantage of trading using opposite Mfs Growth and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Growth 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 Growth vs. Transamerica Emerging Markets | Mfs Growth vs. Ab All Market | Mfs Growth vs. Pace International Emerging | Mfs Growth vs. Western Asset Diversified |
| Transamerica Emerging vs. T Rowe Price | Transamerica Emerging vs. Ishares Municipal Bond | Transamerica Emerging vs. Bbh Intermediate Municipal | Transamerica Emerging vs. Morningstar Municipal Bond |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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