Correlation Between Mfs Intrinsic and Mfs Emerging

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

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

Diversification Opportunities for Mfs Intrinsic and Mfs Emerging

-0.13

Correlation Coefficient

Mfs Intrinsic  Mfs Emerging

Good diversification

The 3 months correlation between Mfs and Mfs is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Intrinsic Value 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 Mfs Intrinsic 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 Intrinsic Value 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 Mfs Intrinsic i.e., Mfs Intrinsic and Mfs Emerging go up and down completely randomly.

Pair Corralation between Mfs Intrinsic and Mfs Emerging

Assuming the 90 days horizon Mfs Intrinsic Value is expected to generate 1.85 times more return on investment than Mfs Emerging. However, Mfs Intrinsic is 1.85 times more volatile than Mfs Emerging Markets. It trades about 0.09 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest  984.00  in Mfs Intrinsic Value on October 1, 2024 and sell it today you would earn a total of  220.00  from holding Mfs Intrinsic Value or generate 22.36% return on investment over 90 days.

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

Mfs Intrinsic Value  vs.  Mfs Emerging Markets

Mfs Intrinsic Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Intrinsic Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Mfs Intrinsic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Intrinsic and Mfs Emerging

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

The idea behind Mfs Intrinsic Value and Mfs Emerging Markets 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.