Correlation Between Mfs International and Mfs Growth

Can any of the company-specific risk be diversified away by investing in both Mfs International and Mfs Growth 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 Mfs Growth 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 Mfs Growth Fund, you can compare the effects of market volatilities on Mfs International and Mfs Growth 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 Mfs Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Mfs Growth.

Diversification Opportunities for Mfs International and Mfs Growth

-0.5

Correlation Coefficient

Mfs International  Mfs Growth

Very good diversification

The 3 months correlation between Mfs and Mfs is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Diversificat and Mfs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Growth Fund 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 Mfs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Growth Fund has no effect on the direction of Mfs International i.e., Mfs International and Mfs Growth go up and down completely randomly.

Pair Corralation between Mfs International and Mfs Growth

Assuming the 90 days horizon Mfs International Diversification is expected to generate 0.55 times more return on investment than Mfs Growth. However, Mfs International Diversification is 1.82 times less risky than Mfs Growth. It trades about 0.14 of its potential returns per unit of risk. Mfs Growth Fund is currently generating about -0.09 per unit of risk. If you would invest  2,301  in Mfs International Diversification on December 27, 2024 and sell it today you would earn a total of  158.00  from holding Mfs International Diversification or generate 6.87% return on investment over 90 days.

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

Mfs International Diversificat  vs.  Mfs Growth Fund

Mfs International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International Diversification are ranked lower than 11 (%) 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.

Mfs Growth Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals 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 Mfs Growth

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

The idea behind Mfs International Diversification and Mfs Growth Fund 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.