Correlation Between Mfs International and Hood River

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

Diversification Opportunities for Mfs International and Hood River

-0.47

Correlation Coefficient

Mfs International  Hood River

Very good diversification

The 3 months correlation between Mfs and Hood is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Hood River International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hood River International 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 Hood River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hood River International has no effect on the direction of Mfs International i.e., Mfs International and Hood River go up and down completely randomly.

Pair Corralation between Mfs International and Hood River

Assuming the 90 days horizon Mfs International New is expected to under-perform the Hood River. In addition to that, Mfs International is 1.38 times more volatile than Hood River International. It trades about -0.35 of its total potential returns per unit of risk. Hood River International is currently generating about -0.11 per unit of volatility. If you would invest  1,238  in Hood River International on October 7, 2024 and sell it today you would lose (34.00) from holding Hood River International or give up 2.75% of portfolio value over 90 days.

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

Mfs International New  vs.  Hood River International

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 weak performance in the last few months, the Fund's technical indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Hood River International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hood River International are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hood River may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mfs International and Hood River

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

The idea behind Mfs International New and Hood River International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.