Correlation Between Mfs Emerging and Emerald Growth

Can any of the company-specific risk be diversified away by investing in both Mfs Emerging and Emerald Growth 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 Mfs Emerging and Emerald Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mfs Emerging Markets and Emerald Growth Fund, you can compare the effects of market volatilities on Mfs Emerging and Emerald Growth 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 Mfs Emerging with a short position of Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Emerald Growth.

Diversification Opportunities for Mfs Emerging and Emerald Growth

-0.18

Correlation Coefficient

Mfs Emerging  Emerald Growth

Good diversification

The 3 months correlation between MFS and Emerald is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth and Mfs 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 Mfs Emerging Markets are associated (or correlated) with Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Emerald Growth go up and down completely randomly.

Pair Corralation between Mfs Emerging and Emerald Growth

Assuming the 90 days horizon Mfs Emerging is expected to generate 24.19 times less return on investment than Emerald Growth. But when comparing it to its historical volatility, Mfs Emerging Markets is 5.31 times less risky than Emerald Growth. It trades about 0.04 of its potential returns per unit of risk. Emerald Growth Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,358  in Emerald Growth Fund on September 4, 2024 and sell it today you would earn a total of  352.00  from holding Emerald Growth Fund or generate 14.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mfs Emerging Markets  vs.  Emerald Growth Fund

Mfs Emerging Markets

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mfs Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Emerald Growth

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Growth Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Emerald Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mfs Emerging and Emerald Growth

The main advantage of trading using opposite Mfs Emerging and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Emerald Growth 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 Emerald Growth will offset losses from the drop in Emerald Growth's long position.

The idea behind Mfs Emerging Markets and Emerald Growth Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.