Correlation Between Mfs Global and Gold

Can any of the company-specific risk be diversified away by investing in both Mfs Global and Gold 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 Global and Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mfs Global New and Gold And Precious, you can compare the effects of market volatilities on Mfs Global and Gold 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 Global with a short position of Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Global and Gold.

Diversification Opportunities for Mfs Global and Gold

-0.13

Correlation Coefficient

Mfs Global  Gold

Good diversification

The 3 months correlation between Mfs and Gold is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Global New and Gold And Precious in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold And Precious and Mfs Global 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 Global New are associated (or correlated) with Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold And Precious has no effect on the direction of Mfs Global i.e., Mfs Global and Gold go up and down completely randomly.

Pair Corralation between Mfs Global and Gold

Assuming the 90 days horizon Mfs Global New is expected to under-perform the Gold. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mfs Global New is 1.73 times less risky than Gold. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Gold And Precious is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,097  in Gold And Precious on February 8, 2024 and sell it today you would earn a total of  25.00  from holding Gold And Precious or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mfs Global New  vs.  Gold And Precious

Mfs Global New

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Global New are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Mfs Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Gold And Precious

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold And Precious are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mfs Global and Gold

The main advantage of trading using opposite Mfs Global and Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Global position performs unexpectedly, Gold 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 Gold will offset losses from the drop in Gold's long position.

The idea behind Mfs Global New and Gold And Precious 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.