Correlation Between Government Securities and Mfs Emerging
Can any of the company-specific risk be diversified away by investing in both Government Securities and Mfs 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 Government Securities and Mfs Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Mfs Emerging Markets, you can compare the effects of market volatilities on Government Securities and Mfs 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 Government Securities with a short position of Mfs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Mfs Emerging.
Diversification Opportunities for Government Securities and Mfs Emerging
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Government and Mfs is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Mfs Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Emerging Markets and Government Securities 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 Government Securities Fund are associated (or correlated) with Mfs Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Emerging Markets has no effect on the direction of Government Securities i.e., Government Securities and Mfs Emerging go up and down completely randomly.
Pair Corralation between Government Securities and Mfs Emerging
Assuming the 90 days horizon Government Securities Fund is expected to generate 1.08 times more return on investment than Mfs Emerging. However, Government Securities is 1.08 times more volatile than Mfs Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.08 per unit of risk. If you would invest 880.00 in Government Securities Fund on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Government Securities Fund or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Government Securities Fund vs. Mfs Emerging Markets
Performance |
| Timeline |
| Government Securities |
| Mfs Emerging Markets |
Government Securities and Mfs Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Government Securities and Mfs Emerging
The main advantage of trading using opposite Government Securities and Mfs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities position performs unexpectedly, Mfs 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 Mfs Emerging will offset losses from the drop in Mfs Emerging's long position.| Government Securities vs. Capital Growth Fund | Government Securities vs. High Income Fund | Government Securities vs. International Fund International | Government Securities vs. Growth Income Fund |
| Mfs Emerging vs. Blackrock Government Bond | Mfs Emerging vs. Government Securities Fund | Mfs Emerging vs. Us Government Securities | Mfs Emerging vs. Lord Abbett Government |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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