Correlation Between Investec Emerging and Mfs International
Can any of the company-specific risk be diversified away by investing in both Investec Emerging 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 Investec Emerging and Mfs International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Emerging Markets and Mfs International Diversification, you can compare the effects of market volatilities on Investec Emerging 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 Investec Emerging with a short position of Mfs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Emerging and Mfs International.
Diversification Opportunities for Investec Emerging and Mfs International
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investec and Mfs is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Investec Emerging Markets and Mfs International Diversificat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International and Investec Emerging 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 Investec Emerging Markets 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 Investec Emerging i.e., Investec Emerging and Mfs International go up and down completely randomly.
Pair Corralation between Investec Emerging and Mfs International
Assuming the 90 days horizon Investec Emerging Markets is expected to generate 1.26 times more return on investment than Mfs International. However, Investec Emerging is 1.26 times more volatile than Mfs International Diversification. It trades about 0.04 of its potential returns per unit of risk. Mfs International Diversification is currently generating about 0.02 per unit of risk. If you would invest 1,020 in Investec Emerging Markets on August 29, 2024 and sell it today you would earn a total of 52.00 from holding Investec Emerging Markets or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Emerging Markets vs. Mfs International Diversificat
Performance |
| Timeline |
| Investec Emerging Markets |
| Mfs International |
Investec Emerging and Mfs International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Emerging and Mfs International
The main advantage of trading using opposite Investec Emerging and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Emerging 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.| Investec Emerging vs. Ab High Income | Investec Emerging vs. Vanguard High Yield Tax Exempt | Investec Emerging vs. Victory High Income | Investec Emerging vs. Calvert High Yield |
| Mfs International vs. Ab High Income | Mfs International vs. Artisan High Income | Mfs International vs. T Rowe Price | Mfs International vs. Vanguard High Yield Tax Exempt |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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