Correlation Between Mfs International and Federated Global

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

By analyzing existing cross correlation between Mfs International New and Federated Global Allocation, you can compare the effects of market volatilities on Mfs International and Federated 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 Federated Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs International and Federated Global.

Diversification Opportunities for Mfs International and Federated Global

0.43

Correlation Coefficient

Mfs International  Federated Global

Very weak diversification

The 3 months correlation between Mfs and Federated is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Federated Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Global All 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 New are associated (or correlated) with Federated Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Global All has no effect on the direction of Mfs International i.e., Mfs International and Federated Global go up and down completely randomly.

Pair Corralation between Mfs International and Federated Global

Assuming the 90 days horizon Mfs International New is expected to under-perform the Federated Global. In addition to that, Mfs International is 1.84 times more volatile than Federated Global Allocation. It trades about -0.2 of its total potential returns per unit of risk. Federated Global Allocation is currently generating about 0.0 per unit of volatility. If you would invest  1,986  in Federated Global Allocation on October 25, 2024 and sell it today you would lose (2.00) from holding Federated Global Allocation or give up 0.1% of portfolio value over 90 days.

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

Mfs International New  vs.  Federated Global Allocation

Mfs International New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mfs International New 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.

Federated Global All

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Global Allocation are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Federated Global 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 International and Federated Global

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

The idea behind Mfs International New and Federated Global Allocation 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.

Check out your portfolio center.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.