Correlation Between Western Asset and Mfs Emerging
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Mfs Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Mfs Emerging Markets, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Mfs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Mfs Emerging.
Diversification Opportunities for Western Asset and Mfs Emerging
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Mfs is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High 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 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 High 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 Western Asset i.e., Western Asset and Mfs Emerging go up and down completely randomly.
Pair Corralation between Western Asset and Mfs Emerging
Assuming the 90 days horizon Western Asset High is expected to generate 0.7 times more return on investment than Mfs Emerging. However, Western Asset High is 1.43 times less risky than Mfs Emerging. It trades about 0.11 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 590.00 in Western Asset High on August 26, 2024 and sell it today you would earn a total of 115.00 from holding Western Asset High or generate 19.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Mfs Emerging Markets
Performance |
| Timeline |
| Western Asset High |
| Mfs Emerging Markets |
Western Asset and Mfs Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Mfs Emerging
The main advantage of trading using opposite Western Asset and Mfs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Prudential Core Conservative | Western Asset vs. American Funds Conservative | Western Asset vs. Fidelity Advisor Diversified | Western Asset vs. Blackrock Conservative Prprdptfinstttnl |
| Mfs Emerging vs. Pace High Yield | Mfs Emerging vs. Pioneer High Income | Mfs Emerging vs. Western Asset High | Mfs Emerging vs. Needham Aggressive Growth |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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