Correlation Between Mfs International and Janus Global

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

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

Diversification Opportunities for Mfs International and Janus Global

0.8

Correlation Coefficient

Mfs International  Janus Global

Very poor diversification

The 3 months correlation between Mfs and Janus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Diversificat and Janus Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus Global Real and Mfs 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 Mfs International Diversification are associated (or correlated) with Janus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus Global Real has no effect on the direction of Mfs International i.e., Mfs International and Janus Global go up and down completely randomly.

Pair Corralation between Mfs International and Janus Global

Assuming the 90 days horizon Mfs International Diversification is expected to generate 0.86 times more return on investment than Janus Global. However, Mfs International Diversification is 1.16 times less risky than Janus Global. It trades about -0.11 of its potential returns per unit of risk. Janus Global Real is currently generating about -0.19 per unit of risk. If you would invest  2,469  in Mfs International Diversification on September 16, 2024 and sell it today you would lose (74.00) from holding Mfs International Diversification or give up 3.0% of portfolio value over 90 days.

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

Mfs International Diversificat  vs.  Janus Global Real

Mfs International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Janus Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Janus Global Real 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.

Pair Trading with Mfs International and Janus Global

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

The idea behind Mfs International Diversification and Janus Global Real 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.