Correlation Between Visa and Mfs Emerging
Can any of the company-specific risk be diversified away by investing in both Visa and Mfs 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 Visa and Mfs Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Mfs Emerging Markets, you can compare the effects of market volatilities on Visa and Mfs 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 Visa with a short position of Mfs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Mfs Emerging.
Diversification Opportunities for Visa and Mfs Emerging
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Visa and Mfs is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Mfs Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Emerging Markets and Visa 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 Visa Class A are associated (or correlated) with Mfs Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Emerging Markets has no effect on the direction of Visa i.e., Visa and Mfs Emerging go up and down completely randomly.
Pair Corralation between Visa and Mfs Emerging
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.58 times more return on investment than Mfs Emerging. However, Visa is 1.58 times more volatile than Mfs Emerging Markets. It trades about 0.19 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.08 per unit of risk. If you would invest 22,836 in Visa Class A on January 25, 2024 and sell it today you would earn a total of 4,575 from holding Visa Class A or generate 20.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Mfs Emerging Markets
Performance |
| Timeline |
| Visa Class A |
| Mfs Emerging Markets |
Visa and Mfs Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Mfs Emerging
The main advantage of trading using opposite Visa and Mfs Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Mfs 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 Mfs Emerging will offset losses from the drop in Mfs Emerging's long position.The idea behind Visa Class A and Mfs 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.| Mfs Emerging vs. Pimco Emerging Markets | Mfs Emerging vs. Pimco Emerging Local | Mfs Emerging vs. Pimco Emerging Local | Mfs Emerging vs. Pimco Emerging Local |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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