Correlation Between Mfs Emerging and Emerging Growth
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Emerging Growth 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 Emerging Growth 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 Emerging Growth Fund, you can compare the effects of market volatilities on Mfs Emerging and Emerging Growth 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 Emerging Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Emerging Growth.
Diversification Opportunities for Mfs Emerging and Emerging Growth
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between MFS and Emerging is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Emerging Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Growth 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 Emerging Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Growth has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Emerging Growth go up and down completely randomly.
Pair Corralation between Mfs Emerging and Emerging Growth
Assuming the 90 days horizon Mfs Emerging is expected to generate 1.98 times less return on investment than Emerging Growth. But when comparing it to its historical volatility, Mfs Emerging Markets is 3.91 times less risky than Emerging Growth. It trades about 0.19 of its potential returns per unit of risk. Emerging Growth Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,006 in Emerging Growth Fund on September 4, 2024 and sell it today you would earn a total of 403.00 from holding Emerging Growth Fund or generate 40.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Mfs Emerging Markets vs. Emerging Growth Fund
Performance |
| Timeline |
| Mfs Emerging Markets |
| Emerging Growth |
Mfs Emerging and Emerging Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Emerging Growth
The main advantage of trading using opposite Mfs Emerging and Emerging Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Emerging Growth 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 Emerging Growth will offset losses from the drop in Emerging Growth'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 |
| Emerging Growth vs. Wells Fargo Advantage | Emerging Growth vs. Wells Fargo Advantage | Emerging Growth vs. Wells Fargo Advantage | Emerging Growth vs. Wells Fargo Ultra |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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