Correlation Between Icon Natural and Mfs International

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

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

Diversification Opportunities for Icon Natural and Mfs International

-0.28

Correlation Coefficient

Icon Natural  Mfs International

Very good diversification

The 3 months correlation between Icon and Mfs is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Icon Natural Resources and Mfs International Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Large and Icon Natural 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 Icon Natural Resources 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 Large has no effect on the direction of Icon Natural i.e., Icon Natural and Mfs International go up and down completely randomly.

Pair Corralation between Icon Natural and Mfs International

Assuming the 90 days horizon Icon Natural Resources is expected to under-perform the Mfs International. In addition to that, Icon Natural is 1.84 times more volatile than Mfs International Large. It trades about -0.03 of its total potential returns per unit of risk. Mfs International Large is currently generating about 0.3 per unit of volatility. If you would invest  1,291  in Mfs International Large on December 19, 2024 and sell it today you would earn a total of  193.00  from holding Mfs International Large or generate 14.95% return on investment over 90 days.

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

Icon Natural Resources  vs.  Mfs International Large

Icon Natural Resources

Risk-Adjusted Performance

Very Weak

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

Mfs International Large

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International Large are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mfs International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Icon Natural and Mfs International

The main advantage of trading using opposite Icon Natural and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Icon Natural 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 Icon Natural Resources and Mfs International Large 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.