Correlation Between Mfs International and Mfs Prudent
Can any of the company-specific risk be diversified away by investing in both Mfs International and Mfs Prudent 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 Mfs Prudent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs International Large and Mfs Prudent Investor, you can compare the effects of market volatilities on Mfs International and Mfs Prudent 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 Mfs Prudent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Mfs Prudent.
Diversification Opportunities for Mfs International and Mfs Prudent
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Mfs is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Large and Mfs Prudent Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Prudent Investor 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 Large are associated (or correlated) with Mfs Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Prudent Investor has no effect on the direction of Mfs International i.e., Mfs International and Mfs Prudent go up and down completely randomly.
Pair Corralation between Mfs International and Mfs Prudent
Assuming the 90 days horizon Mfs International Large is expected to under-perform the Mfs Prudent. In addition to that, Mfs International is 1.87 times more volatile than Mfs Prudent Investor. It trades about -0.22 of its total potential returns per unit of risk. Mfs Prudent Investor is currently generating about -0.11 per unit of volatility. If you would invest 1,207 in Mfs Prudent Investor on August 27, 2024 and sell it today you would lose (12.00) from holding Mfs Prudent Investor or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs International Large vs. Mfs Prudent Investor
Performance |
| Timeline |
| Mfs International Large |
| Mfs Prudent Investor |
Mfs International and Mfs Prudent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Mfs Prudent
The main advantage of trading using opposite Mfs International and Mfs Prudent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Mfs Prudent 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 Mfs Prudent will offset losses from the drop in Mfs Prudent'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 |
| Mfs Prudent vs. Mfs Prudent Investor | Mfs Prudent vs. Mfs Lifetime 2065 | Mfs Prudent vs. Mfs Lifetime 2065 | Mfs Prudent vs. Mfs Lifetime 2065 |
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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