Correlation Between Western Asset and Mfs International
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Mfs International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Mfs International Value, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Mfs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Mfs International.
Diversification Opportunities for Western Asset and Mfs International
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Mfs is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation 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 Western Asset 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 Western Asset Inflation 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 Western Asset i.e., Western Asset and Mfs International go up and down completely randomly.
Pair Corralation between Western Asset and Mfs International
Assuming the 90 days horizon Western Asset Inflation is expected to generate 0.36 times more return on investment than Mfs International. However, Western Asset Inflation is 2.77 times less risky than Mfs International. It trades about 0.1 of its potential returns per unit of risk. Mfs International Value is currently generating about -0.08 per unit of risk. If you would invest 935.00 in Western Asset Inflation on September 3, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset Inflation or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Mfs International Value
Performance |
| Timeline |
| Western Asset Inflation |
| Mfs International Value |
Western Asset and Mfs International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Mfs International
The main advantage of trading using opposite Western Asset and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Blackrock Sm Cap | Western Asset vs. Principal Lifetime Hybrid | Western Asset vs. Adams Diversified Equity | Western Asset vs. Lord Abbett Diversified |
| Mfs International vs. Jhancock Real Estate | Mfs International vs. Tiaa Cref Real Estate | Mfs International vs. Fidelity Real Estate | Mfs International vs. Columbia Real Estate |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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