Correlation Between Mfs New and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Mfs New and Federated Hermes 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 New and Federated Hermes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs New Discovery and Federated Hermes Inflation, you can compare the effects of market volatilities on Mfs New and Federated Hermes 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 New with a short position of Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs New and Federated Hermes.
Diversification Opportunities for Mfs New and Federated Hermes
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mfs and Federated is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mfs New Discovery and Federated Hermes Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes Inf and Mfs New 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 New Discovery are associated (or correlated) with Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes Inf has no effect on the direction of Mfs New i.e., Mfs New and Federated Hermes go up and down completely randomly.
Pair Corralation between Mfs New and Federated Hermes
Assuming the 90 days horizon Mfs New Discovery is expected to generate 3.14 times more return on investment than Federated Hermes. However, Mfs New is 3.14 times more volatile than Federated Hermes Inflation. It trades about 0.04 of its potential returns per unit of risk. Federated Hermes Inflation is currently generating about 0.04 per unit of risk. If you would invest 2,856 in Mfs New Discovery on September 12, 2024 and sell it today you would earn a total of 359.00 from holding Mfs New Discovery or generate 12.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Mfs New Discovery vs. Federated Hermes Inflation
Performance |
| Timeline |
| Mfs New Discovery |
| Federated Hermes Inf |
Mfs New and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs New and Federated Hermes
The main advantage of trading using opposite Mfs New and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs New position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Mfs New vs. Federated Hermes Inflation | Mfs New vs. Guggenheim Managed Futures | Mfs New vs. Simt Multi Asset Inflation | Mfs New vs. American Funds Inflation |
| Federated Hermes vs. Ab Bond Inflation | Federated Hermes vs. Blackrock Inflation Protected | Federated Hermes vs. Arrow Managed Futures | Federated Hermes vs. Lord Abbett Inflation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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