Correlation Between Mfs International and Mfs Growth
Can any of the company-specific risk be diversified away by investing in both Mfs International and Mfs Growth 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 Growth 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 Growth Fund, you can compare the effects of market volatilities on Mfs International and Mfs Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Mfs Growth.
Diversification Opportunities for Mfs International and Mfs Growth
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mfs and Mfs is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Large and Mfs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Growth Fund 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Growth Fund has no effect on the direction of Mfs International i.e., Mfs International and Mfs Growth go up and down completely randomly.
Pair Corralation between Mfs International and Mfs Growth
Assuming the 90 days horizon Mfs International Large is expected to under-perform the Mfs Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs International Large is 1.41 times less risky than Mfs Growth. The mutual fund trades about -0.22 of its potential returns per unit of risk. The Mfs Growth Fund is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 20,066 in Mfs Growth Fund on August 29, 2024 and sell it today you would earn a total of 774.00 from holding Mfs Growth Fund or generate 3.86% 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 Large vs. Mfs Growth Fund
Performance |
| Timeline |
| Mfs International Large |
| Mfs Growth Fund |
Mfs International and Mfs Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Mfs Growth
The main advantage of trading using opposite Mfs International and Mfs Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Mfs Growth 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 Growth will offset losses from the drop in Mfs Growth's long position.The idea behind Mfs International Large and Mfs Growth Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Mfs Growth vs. Massachusetts Investors Trust | Mfs Growth vs. Mfs Research Fund | Mfs Growth vs. Massachusetts Investors Growth | Mfs Growth vs. Mfs Value Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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