Correlation Between Mfs International and Vanguard Health
Can any of the company-specific risk be diversified away by investing in both Mfs International and Vanguard Health 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 Vanguard Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs International New and Vanguard Health Care, you can compare the effects of market volatilities on Mfs International and Vanguard Health 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 Vanguard Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Vanguard Health.
Diversification Opportunities for Mfs International and Vanguard Health
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and VANGUARD is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Vanguard Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Health Care 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 New are associated (or correlated) with Vanguard Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Health Care has no effect on the direction of Mfs International i.e., Mfs International and Vanguard Health go up and down completely randomly.
Pair Corralation between Mfs International and Vanguard Health
Assuming the 90 days horizon Mfs International is expected to generate 4.98 times less return on investment than Vanguard Health. But when comparing it to its historical volatility, Mfs International New is 1.22 times less risky than Vanguard Health. It trades about 0.09 of its potential returns per unit of risk. Vanguard Health Care is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 12,705 in Vanguard Health Care on November 3, 2024 and sell it today you would earn a total of 843.00 from holding Vanguard Health Care or generate 6.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs International New vs. Vanguard Health Care
Performance |
| Timeline |
| Mfs International New |
| Vanguard Health Care |
Mfs International and Vanguard Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Vanguard Health
The main advantage of trading using opposite Mfs International and Vanguard Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Vanguard Health 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 Vanguard Health will offset losses from the drop in Vanguard Health's long position.| Mfs International vs. Vanguard Reit Index | Mfs International vs. Prudential Real Estate | Mfs International vs. Neuberger Berman Real | Mfs International vs. Fidelity Real Estate |
| Vanguard Health vs. Vanguard Information Technology | Vanguard Health vs. Vanguard Sumer Staples | Vanguard Health vs. Vanguard Sumer Discretionary | Vanguard Health vs. Vanguard Financials Index |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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