Correlation Between Emerge Capital and MFS Investment

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

By analyzing existing cross correlation between Emerge Capital Management and MFS Investment Grade, you can compare the effects of market volatilities on Emerge Capital and MFS Investment 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 Emerge Capital with a short position of MFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerge Capital and MFS Investment.

Diversification Opportunities for Emerge Capital and MFS Investment

0.27

Correlation Coefficient

Emerge Capital  MFS Investment

Modest diversification

The 3 months correlation between Emerge and MFS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Emerge Capital Management and MFS Investment Grade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Investment Grade and Emerge Capital 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 Emerge Capital Management are associated (or correlated) with MFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Investment Grade has no effect on the direction of Emerge Capital i.e., Emerge Capital and MFS Investment go up and down completely randomly.

Pair Corralation between Emerge Capital and MFS Investment

If you would invest  811.00  in MFS Investment Grade on September 16, 2024 and sell it today you would earn a total of  2.00  from holding MFS Investment Grade or generate 0.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Emerge Capital Management  vs.  MFS Investment Grade

Emerge Capital Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerge Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Emerge Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MFS Investment Grade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFS Investment Grade has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MFS Investment is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Emerge Capital and MFS Investment

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

The idea behind Emerge Capital Management and MFS Investment Grade 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.