Correlation Between Cref Inflation-linked and Mfs International
Can any of the company-specific risk be diversified away by investing in both Cref Inflation-linked 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 Cref Inflation-linked and Mfs International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cref Inflation Linked Bond and Mfs International Diversification, you can compare the effects of market volatilities on Cref Inflation-linked 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 Cref Inflation-linked with a short position of Mfs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Mfs International.
Diversification Opportunities for Cref Inflation-linked and Mfs International
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CREF and Mfs is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Mfs International Diversificat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International and Cref Inflation-linked 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 Cref Inflation Linked Bond 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 has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Mfs International go up and down completely randomly.
Pair Corralation between Cref Inflation-linked and Mfs International
Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 2.96 times less return on investment than Mfs International. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 2.85 times less risky than Mfs International. It trades about 0.06 of its potential returns per unit of risk. Mfs International Diversification is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,905 in Mfs International Diversification on September 5, 2024 and sell it today you would earn a total of 481.00 from holding Mfs International Diversification or generate 25.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Cref Inflation Linked Bond vs. Mfs International Diversificat
Performance |
| Timeline |
| Cref Inflation Linked |
| Mfs International |
Cref Inflation-linked and Mfs International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cref Inflation-linked and Mfs International
The main advantage of trading using opposite Cref Inflation-linked and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cref Inflation-linked 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.| Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard 500 Index | Cref Inflation-linked vs. Vanguard Total Stock | Cref Inflation-linked vs. Vanguard Total Stock |
| Mfs International vs. Ab Bond Inflation | Mfs International vs. Asg Managed Futures | Mfs International vs. Cref Inflation Linked Bond | Mfs International vs. Oklahoma College Savings |
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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