Correlation Between Mfs Emerging and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Sp Smallcap 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 Sp Smallcap 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 Sp Smallcap 600, you can compare the effects of market volatilities on Mfs Emerging and Sp Smallcap 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 Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Sp Smallcap.
Diversification Opportunities for Mfs Emerging and Sp Smallcap
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mfs and RYWAX is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Sp Smallcap 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap 600 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 Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap 600 has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Sp Smallcap go up and down completely randomly.
Pair Corralation between Mfs Emerging and Sp Smallcap
Assuming the 90 days horizon Mfs Emerging is expected to generate 16.85 times less return on investment than Sp Smallcap. But when comparing it to its historical volatility, Mfs Emerging Markets is 6.2 times less risky than Sp Smallcap. It trades about 0.12 of its potential returns per unit of risk. Sp Smallcap 600 is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 5,582 in Sp Smallcap 600 on September 2, 2024 and sell it today you would earn a total of 648.00 from holding Sp Smallcap 600 or generate 11.61% 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. Sp Smallcap 600
Performance |
| Timeline |
| Mfs Emerging Markets |
| Sp Smallcap 600 |
Mfs Emerging and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Sp Smallcap
The main advantage of trading using opposite Mfs Emerging and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap'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 |
| Sp Smallcap vs. Sp 500 Pure | Sp Smallcap vs. Sp Midcap 400 | Sp Smallcap vs. Sp Smallcap 600 | Sp Smallcap vs. Sp 500 Pure |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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