Correlation Between Mfs International and Kirr Marbach

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

Diversification Opportunities for Mfs International and Kirr Marbach

0.52

Correlation Coefficient

Mfs International  Kirr Marbach

Very weak diversification

The 3 months correlation between Mfs and Kirr is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Mfs International New and Kirr Marbach Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirr Marbach Partners 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 Kirr Marbach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirr Marbach Partners has no effect on the direction of Mfs International i.e., Mfs International and Kirr Marbach go up and down completely randomly.

Pair Corralation between Mfs International and Kirr Marbach

Assuming the 90 days horizon Mfs International New is expected to under-perform the Kirr Marbach. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs International New is 1.34 times less risky than Kirr Marbach. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Kirr Marbach Partners is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,381  in Kirr Marbach Partners on October 10, 2024 and sell it today you would lose (80.00) from holding Kirr Marbach Partners or give up 2.37% 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.  Kirr Marbach Partners

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 forward 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.

Kirr Marbach Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kirr Marbach Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Kirr Marbach 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 Kirr Marbach

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

The idea behind Mfs International New and Kirr Marbach Partners 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.