Correlation Between Mfs International and Dunham Porategovernment

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

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

Diversification Opportunities for Mfs International and Dunham Porategovernment

0.42

Correlation Coefficient

Mfs International  Dunham Porategovernment

Very weak diversification

The 3 months correlation between Mfs and Dunham is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International Growth and Dunham Porategovernment Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Porategovernment 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 Growth are associated (or correlated) with Dunham Porategovernment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Porategovernment has no effect on the direction of Mfs International i.e., Mfs International and Dunham Porategovernment go up and down completely randomly.

Pair Corralation between Mfs International and Dunham Porategovernment

Assuming the 90 days horizon Mfs International Growth is expected to generate 3.06 times more return on investment than Dunham Porategovernment. However, Mfs International is 3.06 times more volatile than Dunham Porategovernment Bond. It trades about 0.0 of its potential returns per unit of risk. Dunham Porategovernment Bond is currently generating about -0.09 per unit of risk. If you would invest  5,154  in Mfs International Growth on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Mfs International Growth or generate 0.02% return on investment over 90 days.

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

Mfs International Growth  vs.  Dunham Porategovernment Bond

Mfs International Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dunham Porategovernment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dunham Porategovernment Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dunham Porategovernment 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 Dunham Porategovernment

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

The idea behind Mfs International Growth and Dunham Porategovernment Bond 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.