Correlation Between Mfs Emerging and Growth Fund

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

By analyzing existing cross correlation between Mfs Emerging Markets and Growth Fund I, you can compare the effects of market volatilities on Mfs Emerging and Growth Fund 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 Emerging with a short position of Growth Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Growth Fund.

Diversification Opportunities for Mfs Emerging and Growth Fund

0.74

Correlation Coefficient

Mfs Emerging  Growth Fund

Poor diversification

The 3 months correlation between Mfs and Growth is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets and Growth Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund I and Mfs Emerging 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 Emerging Markets are associated (or correlated) with Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund I has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Growth Fund go up and down completely randomly.

Pair Corralation between Mfs Emerging and Growth Fund

Assuming the 90 days horizon Mfs Emerging is expected to generate 3.53 times less return on investment than Growth Fund. But when comparing it to its historical volatility, Mfs Emerging Markets is 3.07 times less risky than Growth Fund. It trades about 0.07 of its potential returns per unit of risk. Growth Fund I is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,965  in Growth Fund I on October 22, 2024 and sell it today you would earn a total of  2,138  from holding Growth Fund I or generate 53.92% return on investment over 90 days.

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

Mfs Emerging Markets  vs.  Growth Fund I

Mfs Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Growth Fund I

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mfs Emerging and Growth Fund

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

The idea behind Mfs Emerging Markets and Growth Fund I 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.