Correlation Between New Germany and MFS Multimarket

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

By analyzing existing cross correlation between New Germany Closed and MFS Multimarket Income, you can compare the effects of market volatilities on New Germany and MFS Multimarket 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 New Germany with a short position of MFS Multimarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Germany and MFS Multimarket.

Diversification Opportunities for New Germany and MFS Multimarket

0.76

Correlation Coefficient

New Germany  MFS Multimarket

Poor diversification

The 3 months correlation between New and MFS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding New Germany Closed and MFS Multimarket Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Multimarket Income and New Germany 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 New Germany Closed are associated (or correlated) with MFS Multimarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Multimarket Income has no effect on the direction of New Germany i.e., New Germany and MFS Multimarket go up and down completely randomly.

Pair Corralation between New Germany and MFS Multimarket

Allowing for the 90-day total investment horizon New Germany Closed is expected to under-perform the MFS Multimarket. In addition to that, New Germany is 1.51 times more volatile than MFS Multimarket Income. It trades about -0.02 of its total potential returns per unit of risk. MFS Multimarket Income is currently generating about -0.02 per unit of volatility. If you would invest  475.00  in MFS Multimarket Income on September 12, 2024 and sell it today you would lose (1.00) from holding MFS Multimarket Income or give up 0.21% of portfolio value over 90 days.

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

New Germany Closed  vs.  MFS Multimarket Income

New Germany Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Germany Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable technical and fundamental indicators, New Germany is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

MFS Multimarket Income

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Multimarket Income are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, MFS Multimarket is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with New Germany and MFS Multimarket

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

The idea behind New Germany Closed and MFS Multimarket Income 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 Anywhere module to track or share privately all of your investments from the convenience of any device.