Correlation Between Mfs Emerging and Western Assets
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Western Assets 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 Western Assets 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 Western Assets Emerging, you can compare the effects of market volatilities on Mfs Emerging and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Western Assets.
Diversification Opportunities for Mfs Emerging and Western Assets
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Western is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets 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 Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Western Assets go up and down completely randomly.
Pair Corralation between Mfs Emerging and Western Assets
Assuming the 90 days horizon Mfs Emerging Markets is expected to generate 0.74 times more return on investment than Western Assets. However, Mfs Emerging Markets is 1.35 times less risky than Western Assets. It trades about 0.1 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.04 per unit of risk. If you would invest 1,211 in Mfs Emerging Markets on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Mfs Emerging Markets or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Emerging Markets vs. Western Assets Emerging
Performance |
| Timeline |
| Mfs Emerging Markets |
| Western Assets Emerging |
Mfs Emerging and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Western Assets
The main advantage of trading using opposite Mfs Emerging and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Mfs Emerging vs. Fidelity New Markets | Mfs Emerging vs. Fidelity New Markets | Mfs Emerging vs. Fidelity New Markets | Mfs Emerging vs. Mfs Emerging Markets |
| Western Assets vs. Fidelity Advisor Energy | Western Assets vs. Short Oil Gas | Western Assets vs. Alpsalerian Energy Infrastructure | Western Assets vs. Franklin Natural Resources |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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