Correlation Between Balanced Fund and Mfs International

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

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

Diversification Opportunities for Balanced Fund and Mfs International

0.15

Correlation Coefficient

Balanced Fund  Mfs International

Average diversification

The 3 months correlation between Balanced and Mfs is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Mfs International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Growth and Balanced Fund 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 Balanced Fund Investor 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 Growth has no effect on the direction of Balanced Fund i.e., Balanced Fund and Mfs International go up and down completely randomly.

Pair Corralation between Balanced Fund and Mfs International

Assuming the 90 days horizon Balanced Fund Investor is expected to generate 0.57 times more return on investment than Mfs International. However, Balanced Fund Investor is 1.74 times less risky than Mfs International. It trades about 0.14 of its potential returns per unit of risk. Mfs International Growth is currently generating about 0.01 per unit of risk. If you would invest  1,948  in Balanced Fund Investor on September 4, 2024 and sell it today you would earn a total of  80.00  from holding Balanced Fund Investor or generate 4.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Balanced Fund Investor  vs.  Mfs International Growth

Balanced Fund Investor

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Investor are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs International Growth

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International Growth are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mfs International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Balanced Fund and Mfs International

The main advantage of trading using opposite Balanced Fund and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.

The idea behind Balanced Fund Investor and Mfs International Growth 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.