Correlation Between Franklin International and Mfs International
Can any of the company-specific risk be diversified away by investing in both Franklin International 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 Franklin International and Mfs International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin International Growth and Mfs International Value, you can compare the effects of market volatilities on Franklin International 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 Franklin International with a short position of Mfs International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin International and Mfs International.
Diversification Opportunities for Franklin International and Mfs International
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Mfs is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Franklin International Growth and Mfs International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Value and Franklin 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 Franklin International Growth 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 Value has no effect on the direction of Franklin International i.e., Franklin International and Mfs International go up and down completely randomly.
Pair Corralation between Franklin International and Mfs International
Assuming the 90 days horizon Franklin International Growth is expected to under-perform the Mfs International. In addition to that, Franklin International is 1.28 times more volatile than Mfs International Value. It trades about -0.48 of its total potential returns per unit of risk. Mfs International Value is currently generating about -0.2 per unit of volatility. If you would invest 3,942 in Mfs International Value on January 23, 2024 and sell it today you would lose (101.00) from holding Mfs International Value or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin International Growth vs. Mfs International Value
Performance |
| Timeline |
| Franklin International |
| Mfs International Value |
Franklin International and Mfs International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin International and Mfs International
The main advantage of trading using opposite Franklin International and Mfs International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin International 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 Franklin International Growth and Mfs International Value 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.
| Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor | Mfs International vs. Mfs Prudent Investor |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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