Correlation Between Davis Select and MFS Active

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

By analyzing existing cross correlation between Davis Select International and MFS Active International, you can compare the effects of market volatilities on Davis Select and MFS Active 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 Davis Select with a short position of MFS Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davis Select and MFS Active.

Diversification Opportunities for Davis Select and MFS Active

0.5

Correlation Coefficient

Davis Select  MFS Active

Very weak diversification

The 3 months correlation between Davis and MFS is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Davis Select International and MFS Active International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFS Active International and Davis Select 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 Davis Select International are associated (or correlated) with MFS Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFS Active International has no effect on the direction of Davis Select i.e., Davis Select and MFS Active go up and down completely randomly.

Pair Corralation between Davis Select and MFS Active

Given the investment horizon of 90 days Davis Select International is expected to generate 1.32 times more return on investment than MFS Active. However, Davis Select is 1.32 times more volatile than MFS Active International. It trades about 0.19 of its potential returns per unit of risk. MFS Active International is currently generating about 0.11 per unit of risk. If you would invest  2,362  in Davis Select International on May 2, 2025 and sell it today you would earn a total of  256.00  from holding Davis Select International or generate 10.84% return on investment over 90 days.

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

Davis Select International  vs.  MFS Active International

Davis Select Interna

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Select International are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Davis Select may actually be approaching a critical reversion point that can send shares even higher in August 2025.

MFS Active International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFS Active International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, MFS Active is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Davis Select and MFS Active

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

The idea behind Davis Select International and MFS Active International 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.