Correlation Between Mfs International and Amg Managers

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

By analyzing existing cross correlation between Mfs International New and Amg Managers Cadence, you can compare the effects of market volatilities on Mfs International and Amg Managers 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 International with a short position of Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Amg Managers.

Diversification Opportunities for Mfs International and Amg Managers

0.83

Correlation Coefficient

Mfs International  Amg Managers

Very poor diversification

The 3 months correlation between Mfs and Amg is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Amg Managers Cadence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Cadence and Mfs International 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 International New are associated (or correlated) with Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Cadence has no effect on the direction of Mfs International i.e., Mfs International and Amg Managers go up and down completely randomly.

Pair Corralation between Mfs International and Amg Managers

Assuming the 90 days horizon Mfs International is expected to generate 1.19 times less return on investment than Amg Managers. But when comparing it to its historical volatility, Mfs International New is 1.05 times less risky than Amg Managers. It trades about 0.02 of its potential returns per unit of risk. Amg Managers Cadence is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,432  in Amg Managers Cadence on September 19, 2024 and sell it today you would earn a total of  295.00  from holding Amg Managers Cadence or generate 6.66% return on investment over 90 days.

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

Mfs International New  vs.  Amg Managers Cadence

Mfs International New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs International New has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Amg Managers Cadence

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amg Managers Cadence has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Mfs International and Amg Managers

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

The idea behind Mfs International New and Amg Managers Cadence 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.