Correlation Between Mfs International and Mfs Emerging
Can any of the company-specific risk be diversified away by investing in both Mfs International and Mfs Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Mfs International and Mfs Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Mfs Emerging.
Diversification Opportunities for Mfs International and Mfs Emerging
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mfs and Mfs is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Large and Mfs Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Emerging Markets has no effect on the direction of Mfs International i.e., Mfs International and Mfs Emerging go up and down completely randomly.
Pair Corralation between Mfs International and Mfs Emerging
Assuming the 90 days horizon Mfs International Large is expected to generate 1.58 times more return on investment than Mfs Emerging. However, Mfs International is 1.58 times more volatile than Mfs Emerging Markets. It trades about 0.06 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 1,235 in Mfs International Large on August 31, 2024 and sell it today you would earn a total of 197.00 from holding Mfs International Large or generate 15.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs International Large vs. Mfs Emerging Markets
Performance |
| Timeline |
| Mfs International Large |
| Mfs Emerging Markets |
Mfs International and Mfs Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs International and Mfs Emerging
The main advantage of trading using opposite Mfs International and Mfs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Mfs Emerging 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 Emerging will offset losses from the drop in Mfs Emerging's long position.| Mfs International vs. Transamerica Large Cap | Mfs International vs. Aqr Large Cap | Mfs International vs. Large Cap Growth Profund | Mfs International vs. American Mutual Fund |
| Mfs Emerging vs. Volumetric Fund Volumetric | Mfs Emerging vs. Fa 529 Aggressive | Mfs Emerging vs. Western Asset Municipal | Mfs Emerging vs. Arrow Managed Futures |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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