Correlation Between Smallcap Growth and Mfs New
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Mfs New 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 Smallcap Growth and Mfs New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Mfs New Discovery, you can compare the effects of market volatilities on Smallcap Growth and Mfs New 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 Smallcap Growth with a short position of Mfs New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Mfs New.
Diversification Opportunities for Smallcap Growth and Mfs New
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Smallcap and Mfs is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Mfs New Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs New Discovery and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Mfs New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs New Discovery has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Mfs New go up and down completely randomly.
Pair Corralation between Smallcap Growth and Mfs New
Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.1 times more return on investment than Mfs New. However, Smallcap Growth is 1.1 times more volatile than Mfs New Discovery. It trades about 0.05 of its potential returns per unit of risk. Mfs New Discovery is currently generating about 0.03 per unit of risk. If you would invest 1,392 in Smallcap Growth Fund on September 12, 2024 and sell it today you would earn a total of 304.00 from holding Smallcap Growth Fund or generate 21.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smallcap Growth Fund vs. Mfs New Discovery
Performance |
| Timeline |
| Smallcap Growth |
| Mfs New Discovery |
Smallcap Growth and Mfs New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Growth and Mfs New
The main advantage of trading using opposite Smallcap Growth and Mfs New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Mfs New 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 New will offset losses from the drop in Mfs New's long position.| Smallcap Growth vs. Allianzgi Diversified Income | Smallcap Growth vs. Global Diversified Income | Smallcap Growth vs. Aqr Diversified Arbitrage | Smallcap Growth vs. Guggenheim Diversified Income |
| Mfs New vs. Pace Smallmedium Value | Mfs New vs. Ab Small Cap | Mfs New vs. Ab Small Cap | Mfs New vs. Smallcap Growth Fund |
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.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |