Correlation Between Nationwide Global and Mfs International

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

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

Diversification Opportunities for Nationwide Global and Mfs International

0.9

Correlation Coefficient

Nationwide Global  Mfs International

Almost no diversification

The 3 months correlation between Nationwide and Mfs is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Global Equity 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 Nationwide Global 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 Nationwide Global Equity 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 Nationwide Global i.e., Nationwide Global and Mfs International go up and down completely randomly.

Pair Corralation between Nationwide Global and Mfs International

Assuming the 90 days horizon Nationwide Global Equity is expected to under-perform the Mfs International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Nationwide Global Equity is 1.27 times less risky than Mfs International. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Mfs International Value is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  4,088  in Mfs International Value on December 4, 2024 and sell it today you would lose (240.00) from holding Mfs International Value or give up 5.87% of portfolio value over 90 days.

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

Nationwide Global Equity  vs.  Mfs International Value

Nationwide Global Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nationwide Global Equity 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.

Mfs International Value

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nationwide Global and Mfs International

The main advantage of trading using opposite Nationwide Global and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Global 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 Nationwide Global Equity 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.