Correlation Between Mfs Blended and Transamerica Emerging

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

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

Diversification Opportunities for Mfs Blended and Transamerica Emerging

0.15

Correlation Coefficient

Mfs Blended  Transamerica Emerging

Average diversification

The 3 months correlation between Mfs and Transamerica is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Blended Research and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Mfs Blended 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 Blended Research are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Mfs Blended i.e., Mfs Blended and Transamerica Emerging go up and down completely randomly.

Pair Corralation between Mfs Blended and Transamerica Emerging

Assuming the 90 days horizon Mfs Blended Research is expected to under-perform the Transamerica Emerging. In addition to that, Mfs Blended is 1.68 times more volatile than Transamerica Emerging Markets. It trades about -0.12 of its total potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.09 per unit of volatility. If you would invest  799.00  in Transamerica Emerging Markets on December 2, 2024 and sell it today you would earn a total of  38.00  from holding Transamerica Emerging Markets or generate 4.76% return on investment over 90 days.

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

Mfs Blended Research  vs.  Transamerica Emerging Markets

Mfs Blended Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Blended Research 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.

Transamerica Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Transamerica Emerging 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 Blended and Transamerica Emerging

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

The idea behind Mfs Blended Research and Transamerica Emerging Markets 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.