Correlation Between MFS Active and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both MFS Active and WisdomTree 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 MFS Active and WisdomTree Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Active Core and WisdomTree Emerging Markets, you can compare the effects of market volatilities on MFS Active and WisdomTree 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 MFS Active with a short position of WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Active and WisdomTree Emerging.
Diversification Opportunities for MFS Active and WisdomTree Emerging
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MFS and WisdomTree is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MFS Active Core and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging and MFS Active 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 Active Core are associated (or correlated) with WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of MFS Active i.e., MFS Active and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between MFS Active and WisdomTree Emerging
Given the investment horizon of 90 days MFS Active is expected to generate 1.55 times less return on investment than WisdomTree Emerging. But when comparing it to its historical volatility, MFS Active Core is 2.46 times less risky than WisdomTree Emerging. It trades about 0.11 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,462 in WisdomTree Emerging Markets on April 28, 2025 and sell it today you would earn a total of 179.00 from holding WisdomTree Emerging Markets or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFS Active Core vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| MFS Active Core |
| WisdomTree Emerging |
MFS Active and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Active and WisdomTree Emerging
The main advantage of trading using opposite MFS Active and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Active position performs unexpectedly, WisdomTree 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 WisdomTree Emerging will offset losses from the drop in WisdomTree Emerging's long position.| MFS Active vs. First Trust Exchange Traded | MFS Active vs. Vanguard Intermediate Term Treasury | MFS Active vs. Vanguard Long Term Treasury | MFS Active vs. Vanguard Multi Sector Income |
| WisdomTree Emerging vs. WisdomTree Interest Rate | WisdomTree Emerging vs. WisdomTree Interest Rate | WisdomTree Emerging vs. WisdomTree Emerging Markets | WisdomTree Emerging vs. WisdomTree Emerging Markets |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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