Correlation Between Gmo Equity and Mfs Emerging

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

By analyzing existing cross correlation between Gmo Equity Allocation and Mfs Emerging Markets, you can compare the effects of market volatilities on Gmo Equity 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 Gmo Equity with a short position of Mfs Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Equity and Mfs Emerging.

Diversification Opportunities for Gmo Equity and Mfs Emerging

0.91

Correlation Coefficient

Gmo Equity  Mfs Emerging

Almost no diversification

The 3 months correlation between Gmo and Mfs is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Equity Allocation 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 Gmo Equity 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 Gmo Equity Allocation 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 Gmo Equity i.e., Gmo Equity and Mfs Emerging go up and down completely randomly.

Pair Corralation between Gmo Equity and Mfs Emerging

Assuming the 90 days horizon Gmo Equity Allocation is expected to generate 2.44 times more return on investment than Mfs Emerging. However, Gmo Equity is 2.44 times more volatile than Mfs Emerging Markets. It trades about 0.2 of its potential returns per unit of risk. Mfs Emerging Markets is currently generating about 0.15 per unit of risk. If you would invest  1,195  in Gmo Equity Allocation on May 4, 2025 and sell it today you would earn a total of  118.00  from holding Gmo Equity Allocation or generate 9.87% return on investment over 90 days.

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

Gmo Equity Allocation  vs.  Mfs Emerging Markets

Gmo Equity Allocation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Equity Allocation are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Gmo Equity may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Mfs Emerging Markets

Risk-Adjusted Performance

Good

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

Pair Trading with Gmo Equity and Mfs Emerging

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

The idea behind Gmo Equity Allocation 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.