Correlation Between Mfs International and Midcap Fund
Can any of the company-specific risk be diversified away by investing in both Mfs International and Midcap Fund 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 Midcap Fund 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 Midcap Fund R 5, you can compare the effects of market volatilities on Mfs International and Midcap Fund 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 Midcap Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Midcap Fund.
Diversification Opportunities for Mfs International and Midcap Fund
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mfs and Midcap is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Value and Midcap Fund R 5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap Fund R 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 Midcap Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Fund R has no effect on the direction of Mfs International i.e., Mfs International and Midcap Fund go up and down completely randomly.
Pair Corralation between Mfs International and Midcap Fund
Assuming the 90 days horizon Mfs International is expected to generate 25.02 times less return on investment than Midcap Fund. In addition to that, Mfs International is 1.04 times more volatile than Midcap Fund R 5. It trades about 0.01 of its total potential returns per unit of risk. Midcap Fund R 5 is currently generating about 0.17 per unit of volatility. If you would invest 4,013 in Midcap Fund R 5 on September 1, 2024 and sell it today you would earn a total of 819.00 from holding Midcap Fund R 5 or generate 20.41% 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. Midcap Fund R 5
Performance |
Timeline |
Mfs International Value |
Midcap Fund R |
Mfs International and Midcap Fund Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mfs International and Midcap Fund
The main advantage of trading using opposite Mfs International and Midcap Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Midcap Fund 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 Midcap Fund will offset losses from the drop in Midcap Fund'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 |
Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management | Midcap Fund vs. Strategic Asset Management |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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