Correlation Between Mfs International and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Mfs International and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Large, you can compare the effects of market volatilities on Mfs International and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Goldman Sachs.
Diversification Opportunities for Mfs International and Goldman Sachs
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mfs and Goldman is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Value and Goldman Sachs Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Large 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Large has no effect on the direction of Mfs International i.e., Mfs International and Goldman Sachs go up and down completely randomly.
Pair Corralation between Mfs International and Goldman Sachs
Assuming the 90 days horizon Mfs International Value is expected to under-perform the Goldman Sachs. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs International Value is 1.4 times less risky than Goldman Sachs. The mutual fund trades about -0.19 of its potential returns per unit of risk. The Goldman Sachs Large is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,550 in Goldman Sachs Large on August 30, 2024 and sell it today you would earn a total of 161.00 from holding Goldman Sachs Large or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs International Value vs. Goldman Sachs Large
Performance |
| Timeline |
| Mfs International Value |
| Goldman Sachs Large |
Mfs International and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Goldman Sachs
The main advantage of trading using opposite Mfs International and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Mfs International vs. Chartwell Small Cap | Mfs International vs. Artisan Small Cap | Mfs International vs. Us Small Cap | Mfs International vs. Baird Smallmid Cap |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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