Correlation Between Mfs Total and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Mfs Total and Federated 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 Total and Federated Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Total Return and Federated Emerging Market, you can compare the effects of market volatilities on Mfs Total and Federated 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 Total with a short position of Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Total and Federated Emerging.
Diversification Opportunities for Mfs Total and Federated Emerging
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mfs and Federated is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Total Return and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market and Mfs Total 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 Total Return are associated (or correlated) with Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Mfs Total i.e., Mfs Total and Federated Emerging go up and down completely randomly.
Pair Corralation between Mfs Total and Federated Emerging
Assuming the 90 days horizon Mfs Total is expected to generate 1.25 times less return on investment than Federated Emerging. In addition to that, Mfs Total is 1.08 times more volatile than Federated Emerging Market. It trades about 0.1 of its total potential returns per unit of risk. Federated Emerging Market is currently generating about 0.13 per unit of volatility. If you would invest 756.00 in Federated Emerging Market on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Federated Emerging Market or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Total Return vs. Federated Emerging Market
Performance |
| Timeline |
| Mfs Total Return |
| Federated Emerging Market |
Mfs Total and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Total and Federated Emerging
The main advantage of trading using opposite Mfs Total and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Total position performs unexpectedly, Federated 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 Federated Emerging will offset losses from the drop in Federated Emerging's long position.| Mfs Total vs. Mfs Prudent Investor | Mfs Total vs. Mfs Prudent Investor | Mfs Total vs. Mfs Prudent Investor | Mfs Total vs. Mfs Prudent Investor |
| Federated Emerging vs. Fidelity Advisor Financial | Federated Emerging vs. 1919 Financial Services | Federated Emerging vs. Mesirow Financial Small | Federated Emerging vs. John Hancock Financial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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