Correlation Between Baron Small and Mfs Emerging
Can any of the company-specific risk be diversified away by investing in both Baron Small 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 Baron Small and Mfs Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Small Cap and Mfs Emerging Markets, you can compare the effects of market volatilities on Baron Small 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 Baron Small with a short position of Mfs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Mfs Emerging.
Diversification Opportunities for Baron Small and Mfs Emerging
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Baron and Mfs is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap 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 Baron Small 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 Baron Small Cap 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 Baron Small i.e., Baron Small and Mfs Emerging go up and down completely randomly.
Pair Corralation between Baron Small and Mfs Emerging
Assuming the 90 days horizon Baron Small Cap is expected to under-perform the Mfs Emerging. In addition to that, Baron Small is 4.49 times more volatile than Mfs Emerging Markets. It trades about -0.1 of its total potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.09 per unit of volatility. If you would invest 1,186 in Mfs Emerging Markets on December 18, 2024 and sell it today you would earn a total of 17.00 from holding Mfs Emerging Markets or generate 1.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Baron Small Cap vs. Mfs Emerging Markets
Performance |
Timeline |
Baron Small Cap |
Mfs Emerging Markets |
Baron Small and Mfs Emerging Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Baron Small and Mfs Emerging
The main advantage of trading using opposite Baron Small and Mfs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small 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.Baron Small vs. Morningstar Defensive Bond | Baron Small vs. Nationwide Government Bond | Baron Small vs. Legg Mason Partners | Baron Small vs. Ab Bond Inflation |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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