Correlation Between Mfs Emerging and Ashmore Emerging

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

Diversification Opportunities for Mfs Emerging and Ashmore Emerging

1.0
  Correlation Coefficient

No risk reduction

The 3 months correlation between Mfs and Ashmore is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding MFS EMERGING MARKETS and Ashmore Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Emerging Markets and Mfs Emerging 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 Emerging Markets are associated (or correlated) with Ashmore Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Emerging Markets has no effect on the direction of Mfs Emerging i.e., Mfs Emerging and Ashmore Emerging go up and down completely randomly.

Pair Corralation between Mfs Emerging and Ashmore Emerging

Assuming the 90 days horizon Mfs Emerging Markets is expected to generate 1.24 times more return on investment than Ashmore Emerging. However, Mfs Emerging is 1.24 times more volatile than Ashmore Emerging Markets. It trades about -0.04 of its potential returns per unit of risk. Ashmore Emerging Markets is currently generating about -0.05 per unit of risk. If you would invest  1,288  in Mfs Emerging Markets on November 24, 2023 and sell it today you would lose (110.00) from holding Mfs Emerging Markets or give up 8.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

MFS EMERGING MARKETS  vs.  Ashmore Emerging Markets

 Performance 
       Timeline  
Mfs Emerging Markets 

Risk-Adjusted Performance

13 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Emerging Markets are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Ashmore Emerging Markets 

Risk-Adjusted Performance

11 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ashmore Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Ashmore Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs Emerging and Ashmore Emerging Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mfs Emerging and Ashmore Emerging

The main advantage of trading using opposite Mfs Emerging and Ashmore Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging position performs unexpectedly, Ashmore 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 Ashmore Emerging will offset losses from the drop in Ashmore Emerging's long position.
The idea behind Mfs Emerging Markets and Ashmore 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.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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