Correlation Between Mfs International and Rems Real

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

Diversification Opportunities for Mfs International and Rems Real

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between MFS and Rems is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MFS INTERNATIONAL VALUE and REMS REAL ESTATE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rems Real Estate and Mfs 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 Mfs International Value are associated (or correlated) with Rems Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rems Real Estate has no effect on the direction of Mfs International i.e., Mfs International and Rems Real go up and down completely randomly.

Pair Corralation between Mfs International and Rems Real

Assuming the 90 days horizon Mfs International Value is expected to generate 0.66 times more return on investment than Rems Real. However, Mfs International Value is 1.52 times less risky than Rems Real. It trades about 0.39 of its potential returns per unit of risk. Rems Real Estate is currently generating about 0.17 per unit of risk. If you would invest  3,543  in Mfs International Value on December 29, 2023 and sell it today you would earn a total of  181.00  from holding Mfs International Value or generate 5.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MFS INTERNATIONAL VALUE  vs.  REMS REAL ESTATE

 Performance 
       Timeline  
Mfs International Value 

Risk-Adjusted Performance

12 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International Value are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Mfs International may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Rems Real Estate 

Risk-Adjusted Performance

0 of 100

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

Mfs International and Rems Real Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mfs International and Rems Real

The main advantage of trading using opposite Mfs International and Rems Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs International position performs unexpectedly, Rems Real 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 Rems Real will offset losses from the drop in Rems Real's long position.
The idea behind Mfs International Value and Rems Real Estate 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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