Correlation Between Mfs Emerging and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Federated Kaufmann 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 Federated Kaufmann 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 Federated Kaufmann Small, you can compare the effects of market volatilities on Mfs Emerging and Federated Kaufmann 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 Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Federated Kaufmann.
Diversification Opportunities for Mfs Emerging and Federated Kaufmann
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between MFS and Federated is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Federated Kaufmann Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Small 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 Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Small has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Mfs Emerging and Federated Kaufmann
Assuming the 90 days horizon Mfs Emerging is expected to generate 1.76 times less return on investment than Federated Kaufmann. But when comparing it to its historical volatility, Mfs Emerging Markets is 3.1 times less risky than Federated Kaufmann. It trades about 0.09 of its potential returns per unit of risk. Federated Kaufmann Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,167 in Federated Kaufmann Small on September 4, 2024 and sell it today you would earn a total of 1,236 from holding Federated Kaufmann Small or generate 29.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mfs Emerging Markets vs. Federated Kaufmann Small
Performance |
| Timeline |
| Mfs Emerging Markets |
| Federated Kaufmann Small |
Mfs Emerging and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Federated Kaufmann
The main advantage of trading using opposite Mfs Emerging and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann'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 |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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