Correlation Between Vanguard Global and Mfs Global

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

By analyzing existing cross correlation between Vanguard Global Ex Us and Mfs Global Real, you can compare the effects of market volatilities on Vanguard Global and Mfs Global 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 Vanguard Global with a short position of Mfs Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Global and Mfs Global.

Diversification Opportunities for Vanguard Global and Mfs Global

0.41

Correlation Coefficient

Vanguard Global  Mfs Global

Very weak diversification

The 3 months correlation between Vanguard and Mfs is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Global Ex Us and Mfs Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Global Real and Vanguard Global 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 Vanguard Global Ex Us are associated (or correlated) with Mfs Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Global Real has no effect on the direction of Vanguard Global i.e., Vanguard Global and Mfs Global go up and down completely randomly.

Pair Corralation between Vanguard Global and Mfs Global

Assuming the 90 days horizon Vanguard Global Ex Us is expected to generate 0.72 times more return on investment than Mfs Global. However, Vanguard Global Ex Us is 1.38 times less risky than Mfs Global. It trades about 0.09 of its potential returns per unit of risk. Mfs Global Real is currently generating about -0.01 per unit of risk. If you would invest  2,398  in Vanguard Global Ex Us on December 29, 2024 and sell it today you would earn a total of  84.00  from holding Vanguard Global Ex Us or generate 3.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Vanguard Global Ex Us  vs.  Mfs Global Real

Vanguard Global Ex

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Global Ex Us are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Vanguard Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Global Real

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vanguard Global and Mfs Global

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

The idea behind Vanguard Global Ex Us and Mfs Global Real 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .