Correlation Between Mfs International and Equity Income

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

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

Diversification Opportunities for Mfs International and Equity Income

0.91

Correlation Coefficient

Mfs International  Equity Income

Almost no diversification

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

Pair Corralation between Mfs International and Equity Income

Assuming the 90 days horizon Mfs International New is expected to generate 0.8 times more return on investment than Equity Income. However, Mfs International New is 1.25 times less risky than Equity Income. It trades about 0.33 of its potential returns per unit of risk. Equity Income Fund is currently generating about 0.23 per unit of risk. If you would invest  3,097  in Mfs International New on April 20, 2025 and sell it today you would earn a total of  326.00  from holding Mfs International New or generate 10.53% return on investment over 90 days.

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

Mfs International New  vs.  Equity Income Fund

Mfs International New

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mfs International New are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Mfs International may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Equity Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Income Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Equity Income may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Mfs International and Equity Income

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

The idea behind Mfs International New and Equity Income Fund 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.