Correlation Between Mfs International and Deutsche Global
Can any of the company-specific risk be diversified away by investing in both Mfs International and Deutsche Global 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 International and Deutsche Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs International Value and Deutsche Global Real, you can compare the effects of market volatilities on Mfs International and Deutsche Global 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 International with a short position of Deutsche Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Deutsche Global.
Diversification Opportunities for Mfs International and Deutsche Global
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Deutsche is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Value and Deutsche Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Global Real and Mfs International 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 International Value are associated (or correlated) with Deutsche Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Global Real has no effect on the direction of Mfs International i.e., Mfs International and Deutsche Global go up and down completely randomly.
Pair Corralation between Mfs International and Deutsche Global
Assuming the 90 days horizon Mfs International is expected to generate 2.24 times less return on investment than Deutsche Global. But when comparing it to its historical volatility, Mfs International Value is 1.0 times less risky than Deutsche Global. It trades about 0.04 of its potential returns per unit of risk. Deutsche Global Real is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 672.00 in Deutsche Global Real on August 29, 2024 and sell it today you would earn a total of 86.00 from holding Deutsche Global Real or generate 12.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs International Value vs. Deutsche Global Real
Performance |
| Timeline |
| Mfs International Value |
| Deutsche Global Real |
Mfs International and Deutsche Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Deutsche Global
The main advantage of trading using opposite Mfs International and Deutsche Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Deutsche Global 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 Deutsche Global will offset losses from the drop in Deutsche Global's long position.| Mfs International vs. Redwood Real Estate | Mfs International vs. Dunham Real Estate | Mfs International vs. Versus Capital Multi Manager | Mfs International vs. Commonwealth Real Estate |
| Deutsche Global vs. Perkins Mid Cap | Deutsche Global vs. Columbia Select Large | Deutsche Global vs. Columbia Large Cap | Deutsche Global vs. Wells Fargo Emerging |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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