Correlation Between Mfs International and Wcm International
Can any of the company-specific risk be diversified away by investing in both Mfs International and Wcm International 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 Wcm International 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 Wcm International Small, you can compare the effects of market volatilities on Mfs International and Wcm International 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 Wcm International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Wcm International.
Diversification Opportunities for Mfs International and Wcm International
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Wcm is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Wcm International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wcm International Small 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 Wcm International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wcm International Small has no effect on the direction of Mfs International i.e., Mfs International and Wcm International go up and down completely randomly.
Pair Corralation between Mfs International and Wcm International
Assuming the 90 days horizon Mfs International New is expected to under-perform the Wcm International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs International New is 1.25 times less risky than Wcm International. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Wcm International Small is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,081 in Wcm International Small on September 1, 2024 and sell it today you would earn a total of 65.00 from holding Wcm International Small or generate 3.12% 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. Wcm International Small
Performance |
| Timeline |
| Mfs International New |
| Wcm International Small |
Mfs International and Wcm International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Wcm International
The main advantage of trading using opposite Mfs International and Wcm International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Wcm International 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 Wcm International will offset losses from the drop in Wcm International'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 |
| Wcm International vs. Investment Managers Series | Wcm International vs. Wcm Focused International | Wcm International vs. Wcm Focused International | Wcm International vs. Wcm Small 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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