Correlation Between Mfs Mid and Mfs International

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

By analyzing existing cross correlation between Mfs Mid Cap and Mfs International Large, you can compare the effects of market volatilities on Mfs Mid and Mfs International 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 Mid with a short position of Mfs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Mid and Mfs International.

Diversification Opportunities for Mfs Mid and Mfs International

0.66

Correlation Coefficient

Mfs Mid  Mfs International

Poor diversification

The 3 months correlation between Mfs and Mfs is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Mid Cap and Mfs International Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Large and Mfs Mid 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 Mid Cap are associated (or correlated) with Mfs International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs International Large has no effect on the direction of Mfs Mid i.e., Mfs Mid and Mfs International go up and down completely randomly.

Pair Corralation between Mfs Mid and Mfs International

Assuming the 90 days horizon Mfs Mid Cap is expected to under-perform the Mfs International. In addition to that, Mfs Mid is 1.81 times more volatile than Mfs International Large. It trades about -0.14 of its total potential returns per unit of risk. Mfs International Large is currently generating about 0.05 per unit of volatility. If you would invest  1,396  in Mfs International Large on November 29, 2024 and sell it today you would earn a total of  32.00  from holding Mfs International Large or generate 2.29% return on investment over 90 days.

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

Mfs Mid Cap  vs.  Mfs International Large

Mfs Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mfs Mid Cap 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 and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Mfs International Large

Risk-Adjusted Performance

Insignificant

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

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

The idea behind Mfs Mid Cap and Mfs International Large 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.