Correlation Between Mfs Technology and Gmo Emerging
Can any of the company-specific risk be diversified away by investing in both Mfs Technology and Gmo 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 Technology and Gmo Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Technology Fund and Gmo Emerging Domestic, you can compare the effects of market volatilities on Mfs Technology and Gmo 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 Technology with a short position of Gmo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Technology and Gmo Emerging.
Diversification Opportunities for Mfs Technology and Gmo Emerging
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mfs and Gmo is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Technology Fund and Gmo Emerging Domestic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Emerging Domestic and Mfs Technology 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 Technology Fund are associated (or correlated) with Gmo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Emerging Domestic has no effect on the direction of Mfs Technology i.e., Mfs Technology and Gmo Emerging go up and down completely randomly.
Pair Corralation between Mfs Technology and Gmo Emerging
Assuming the 90 days horizon Mfs Technology Fund is expected to generate 1.58 times more return on investment than Gmo Emerging. However, Mfs Technology is 1.58 times more volatile than Gmo Emerging Domestic. It trades about 0.07 of its potential returns per unit of risk. Gmo Emerging Domestic is currently generating about -0.1 per unit of risk. If you would invest 3,925 in Mfs Technology Fund on September 12, 2024 and sell it today you would earn a total of 1,395 from holding Mfs Technology Fund or generate 35.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 27.27% |
| Values | Daily Returns |
Mfs Technology Fund vs. Gmo Emerging Domestic
Performance |
| Timeline |
| Mfs Technology |
| Gmo Emerging Domestic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mfs Technology and Gmo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Technology and Gmo Emerging
The main advantage of trading using opposite Mfs Technology and Gmo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Technology position performs unexpectedly, Gmo 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 Gmo Emerging will offset losses from the drop in Gmo Emerging's long position.| Mfs Technology vs. Vanguard Information Technology | Mfs Technology vs. Technology Portfolio Technology | Mfs Technology vs. Fidelity Select Semiconductors | Mfs Technology vs. Software And It |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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