Correlation Between Fidelity International and Mfs International

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

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

Diversification Opportunities for Fidelity International and Mfs International

0.64

Correlation Coefficient

Fidelity International  Mfs International

Poor diversification

The 3 months correlation between Fidelity and Mfs is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Growth and Mfs International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Value and Fidelity 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 Fidelity International Growth 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 Value has no effect on the direction of Fidelity International i.e., Fidelity International and Mfs International go up and down completely randomly.

Pair Corralation between Fidelity International and Mfs International

Assuming the 90 days horizon Fidelity International is expected to generate 3.46 times less return on investment than Mfs International. In addition to that, Fidelity International is 1.11 times more volatile than Mfs International Value. It trades about 0.04 of its total potential returns per unit of risk. Mfs International Value is currently generating about 0.16 per unit of volatility. If you would invest  3,562  in Mfs International Value on December 29, 2024 and sell it today you would earn a total of  331.00  from holding Mfs International Value or generate 9.29% return on investment over 90 days.

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

Fidelity International Growth  vs.  Mfs International Value

Fidelity International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity International Growth are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Fidelity International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs International Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mfs International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fidelity International and Mfs International

The main advantage of trading using opposite Fidelity International and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International 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 Fidelity International Growth and Mfs International Value 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.