Correlation Between Mfs Emerging and Washington Mutual
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Washington Mutual 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 Washington Mutual 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 Washington Mutual Investors, you can compare the effects of market volatilities on Mfs Emerging and Washington Mutual 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 Washington Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Washington Mutual.
Diversification Opportunities for Mfs Emerging and Washington Mutual
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Washington is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Washington Mutual Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Washington Mutual 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 Washington Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Washington Mutual has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Washington Mutual go up and down completely randomly.
Pair Corralation between Mfs Emerging and Washington Mutual
Assuming the 90 days horizon Mfs Emerging is expected to generate 1.49 times less return on investment than Washington Mutual. But when comparing it to its historical volatility, Mfs Emerging Markets is 2.45 times less risky than Washington Mutual. It trades about 0.25 of its potential returns per unit of risk. Washington Mutual Investors is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 6,154 in Washington Mutual Investors on November 30, 2024 and sell it today you would earn a total of 246.00 from holding Washington Mutual Investors or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Emerging Markets vs. Washington Mutual Investors
Performance |
| Timeline |
| Mfs Emerging Markets |
| Washington Mutual |
Mfs Emerging and Washington Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Washington Mutual
The main advantage of trading using opposite Mfs Emerging and Washington Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Washington Mutual 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 Washington Mutual will offset losses from the drop in Washington Mutual's long position.| Mfs Emerging vs. Artisan Small Cap | Mfs Emerging vs. Glg Intl Small | Mfs Emerging vs. Ab Small Cap | Mfs Emerging vs. Small Pany Growth |
| Washington Mutual vs. Elfun Diversified Fund | Washington Mutual vs. Jhancock Diversified Macro | Washington Mutual vs. Wilmington Diversified Income | Washington Mutual vs. Diversified Real Asset |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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