Correlation Between Mfs International and Western Asset
Can any of the company-specific risk be diversified away by investing in both Mfs International and Western Asset 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 Western Asset 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 Western Asset Diversified, you can compare the effects of market volatilities on Mfs International and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Western Asset.
Diversification Opportunities for Mfs International and Western Asset
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Western is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Value and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Mfs International i.e., Mfs International and Western Asset go up and down completely randomly.
Pair Corralation between Mfs International and Western Asset
Assuming the 90 days horizon Mfs International Value is expected to under-perform the Western Asset. In addition to that, Mfs International is 3.13 times more volatile than Western Asset Diversified. It trades about -0.14 of its total potential returns per unit of risk. Western Asset Diversified is currently generating about -0.07 per unit of volatility. If you would invest 1,541 in Western Asset Diversified on August 25, 2024 and sell it today you would lose (6.00) from holding Western Asset Diversified or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs International Value vs. Western Asset Diversified
Performance |
| Timeline |
| Mfs International Value |
| Western Asset Diversified |
Mfs International and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Western Asset
The main advantage of trading using opposite Mfs International and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Mfs International vs. Us Global Investors | Mfs International vs. Vanguard Global Credit | Mfs International vs. Artisan Global Unconstrained | Mfs International vs. T Rowe Price |
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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