Correlation Between Van Eck and MFS Emerging

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Can any of the company-specific risk be diversified away by investing in both Van Eck 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 Van Eck and MFS Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Van Eck Fds and MFS Emerging Markets, you can compare the effects of market volatilities on Van Eck 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 Van Eck with a short position of MFS Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Van Eck and MFS Emerging.

Diversification Opportunities for Van Eck and MFS Emerging

0.99
  Correlation Coefficient

No risk reduction

The 3 months correlation between EMBYX and MEDCX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Van Eck Fds 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 Van Eck 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 Van Eck Fds 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 Van Eck i.e., Van Eck and MFS Emerging go up and down completely randomly.

Pair Corralation between Van Eck and MFS Emerging

Assuming the 90 days horizon Van Eck Fds is expected to generate 1.18 times more return on investment than MFS Emerging. However, Van Eck is 1.18 times more volatile than MFS Emerging Markets. It trades about -0.41 of its potential returns per unit of risk. MFS Emerging Markets is currently generating about -0.54 per unit of risk. If you would invest  537.00  in Van Eck Fds on April 7, 2022 and sell it today you would lose (30.00)  from holding Van Eck Fds or give up 5.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.24%
ValuesDaily Returns

Van Eck Fds  vs.  MFS Emerging Markets

 Performance (%) 
      Timeline 
Van Eck Fds 
EMBYX Performance
0 of 100
Over the last 90 days Van Eck Fds has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

EMBYX Price Channel

MFS Emerging Markets 
MEDCX Performance
0 of 100
Over the last 90 days MFS Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

MEDCX Price Channel

Van Eck and MFS Emerging Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Van Eck and MFS Emerging

The main advantage of trading using opposite Van Eck and MFS Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Van Eck 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.

Van Eck Fds

Pair trading matchups for Van Eck

The idea behind Van Eck Fds 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 Markets

Pair trading matchups for MFS Emerging

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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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