Correlation Between Mfs International and Wasatch World
Can any of the company-specific risk be diversified away by investing in both Mfs International and Wasatch World 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 Wasatch World 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 Wasatch World Innovators, you can compare the effects of market volatilities on Mfs International and Wasatch World 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 Wasatch World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Wasatch World.
Diversification Opportunities for Mfs International and Wasatch World
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Wasatch is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Wasatch World Innovators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch World Innovators 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 Wasatch World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch World Innovators has no effect on the direction of Mfs International i.e., Mfs International and Wasatch World go up and down completely randomly.
Pair Corralation between Mfs International and Wasatch World
Assuming the 90 days horizon Mfs International is expected to generate 1.31 times less return on investment than Wasatch World. But when comparing it to its historical volatility, Mfs International New is 1.13 times less risky than Wasatch World. It trades about 0.03 of its potential returns per unit of risk. Wasatch World Innovators is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,265 in Wasatch World Innovators on September 1, 2024 and sell it today you would earn a total of 130.00 from holding Wasatch World Innovators or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs International New vs. Wasatch World Innovators
Performance |
| Timeline |
| Mfs International New |
| Wasatch World Innovators |
Mfs International and Wasatch World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Wasatch World
The main advantage of trading using opposite Mfs International and Wasatch World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Wasatch World 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 Wasatch World will offset losses from the drop in Wasatch World's long position.| Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor |
| Wasatch World vs. Wasatch International Growth | Wasatch World vs. Wasatch Small Cap | Wasatch World vs. Wasatch Ultra Growth | Wasatch World vs. Wasatch Micro Cap |
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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