Correlation Between Mfs Income and Mfs International

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

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

Diversification Opportunities for Mfs Income and Mfs International

0.69

Correlation Coefficient

Mfs Income  Mfs International

Poor diversification

The 3 months correlation between Mfs and Mfs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Income Fund and Mfs International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs International Value and Mfs Income 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 Income Fund are associated (or correlated) with Mfs International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs International Value has no effect on the direction of Mfs Income i.e., Mfs Income and Mfs International go up and down completely randomly.

Pair Corralation between Mfs Income and Mfs International

Assuming the 90 days horizon Mfs Income is expected to generate 3.26 times less return on investment than Mfs International. But when comparing it to its historical volatility, Mfs Income Fund is 2.35 times less risky than Mfs International. It trades about 0.1 of its potential returns per unit of risk. Mfs International Value is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,352  in Mfs International Value on May 2, 2025 and sell it today you would earn a total of  246.00  from holding Mfs International Value or generate 5.65% return on investment over 90 days.

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

Mfs Income Fund  vs.  Mfs International Value

Mfs Income Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Income Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Mfs Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mfs International Value

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International Value are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Mfs International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mfs Income and Mfs International

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

The idea behind Mfs Income Fund and Mfs International Value 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.