Correlation Between Mfs Emerging and Needham Small
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Needham 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 Needham 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 Needham Small Cap, you can compare the effects of market volatilities on Mfs Emerging and Needham 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 Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Needham Small.
Diversification Opportunities for Mfs Emerging and Needham Small
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between MFS and Needham is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham 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 Needham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Needham Small go up and down completely randomly.
Pair Corralation between Mfs Emerging and Needham Small
Assuming the 90 days horizon Mfs Emerging is expected to generate 12.15 times less return on investment than Needham Small. But when comparing it to its historical volatility, Mfs Emerging Markets is 6.07 times less risky than Needham Small. It trades about 0.04 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,875 in Needham Small Cap on September 3, 2024 and sell it today you would earn a total of 148.00 from holding Needham Small Cap or generate 7.89% 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. Needham Small Cap
Performance |
| Timeline |
| Mfs Emerging Markets |
| Needham Small Cap |
Mfs Emerging and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Needham Small
The main advantage of trading using opposite Mfs Emerging and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Needham 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 Needham Small will offset losses from the drop in Needham Small's long position.| Mfs Emerging vs. Goldman Sachs Short | Mfs Emerging vs. Global Gold Fund | Mfs Emerging vs. James Balanced Golden | Mfs Emerging vs. Fidelity Advisor Gold |
| Needham Small vs. The Hartford Midcap | Needham Small vs. Mfs Emerging Markets | Needham Small vs. Wells Fargo Special | Needham Small vs. Washington Mutual Investors |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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