Correlation Between Mfs Research and Zacks Small-cap

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

By analyzing existing cross correlation between Mfs Research International and Zacks Small Cap E, you can compare the effects of market volatilities on Mfs Research and Zacks Small-cap 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 Research with a short position of Zacks Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Research and Zacks Small-cap.

Diversification Opportunities for Mfs Research and Zacks Small-cap

0.91

Correlation Coefficient

Mfs Research  Zacks Small-cap

Almost no diversification

The 3 months correlation between Mfs and Zacks is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Research International and Zacks Small Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Small Cap and Mfs Research 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 Research International are associated (or correlated) with Zacks Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks Small Cap has no effect on the direction of Mfs Research i.e., Mfs Research and Zacks Small-cap go up and down completely randomly.

Pair Corralation between Mfs Research and Zacks Small-cap

Assuming the 90 days horizon Mfs Research is expected to generate 1.68 times less return on investment than Zacks Small-cap. But when comparing it to its historical volatility, Mfs Research International is 1.63 times less risky than Zacks Small-cap. It trades about 0.17 of its potential returns per unit of risk. Zacks Small Cap E is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,832  in Zacks Small Cap E on April 30, 2025 and sell it today you would earn a total of  337.00  from holding Zacks Small Cap E or generate 11.9% return on investment over 90 days.

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

Mfs Research International  vs.  Zacks Small Cap E

Mfs Research Interna

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs Research International are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mfs Research may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Zacks Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zacks Small Cap E are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Zacks Small-cap may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Mfs Research and Zacks Small-cap

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

The idea behind Mfs Research International and Zacks Small Cap E 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.