Correlation Between Microsoft and Mfs International
Can any of the company-specific risk be diversified away by investing in both Microsoft and Mfs International 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 Microsoft and Mfs International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Mfs International Value, you can compare the effects of market volatilities on Microsoft and Mfs International 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 Microsoft with a short position of Mfs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Mfs International.
Diversification Opportunities for Microsoft and Mfs International
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Mfs is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Mfs International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Value and Microsoft 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 Microsoft are associated (or correlated) with Mfs International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs International Value has no effect on the direction of Microsoft i.e., Microsoft and Mfs International go up and down completely randomly.
Pair Corralation between Microsoft and Mfs International
Given the investment horizon of 90 days Microsoft is expected to generate 1.6 times more return on investment than Mfs International. However, Microsoft is 1.6 times more volatile than Mfs International Value. It trades about 0.06 of its potential returns per unit of risk. Mfs International Value is currently generating about 0.06 per unit of risk. If you would invest 32,302 in Microsoft on September 1, 2024 and sell it today you would earn a total of 10,044 from holding Microsoft or generate 31.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Microsoft vs. Mfs International Value
Performance |
| Timeline |
| Microsoft |
| Mfs International Value |
Microsoft and Mfs International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Mfs International
The main advantage of trading using opposite Microsoft and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Mfs International 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 International will offset losses from the drop in Mfs International's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Mfs International vs. Mirova Global Green | Mfs International vs. Ab Global Risk | Mfs International vs. T Rowe Price | Mfs International vs. Scharf Global Opportunity |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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