Correlation Between Applied Finance and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Mfs Lifetime 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 Applied Finance and Mfs Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Mfs Lifetime 2065, you can compare the effects of market volatilities on Applied Finance and Mfs Lifetime 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 Applied Finance with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Mfs Lifetime.
Diversification Opportunities for Applied Finance and Mfs Lifetime
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Applied and Mfs is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Mfs Lifetime 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2065 and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2065 has no effect on the direction of Applied Finance i.e., Applied Finance and Mfs Lifetime go up and down completely randomly.
Pair Corralation between Applied Finance and Mfs Lifetime
Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Mfs Lifetime. In addition to that, Applied Finance is 1.89 times more volatile than Mfs Lifetime 2065. It trades about -0.1 of its total potential returns per unit of risk. Mfs Lifetime 2065 is currently generating about 0.12 per unit of volatility. If you would invest 1,049 in Mfs Lifetime 2065 on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Mfs Lifetime 2065 or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Mfs Lifetime 2065
Performance |
| Timeline |
| Applied Finance Explorer |
| Mfs Lifetime 2065 |
Applied Finance and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Mfs Lifetime
The main advantage of trading using opposite Applied Finance and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Mfs Lifetime 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 Lifetime will offset losses from the drop in Mfs Lifetime's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small | Applied Finance vs. Oberweis Small Cap Opportunities |
| Mfs Lifetime vs. Stone Ridge Diversified | Mfs Lifetime vs. Jpmorgan Diversified Fund | Mfs Lifetime vs. Lord Abbett Diversified | Mfs Lifetime vs. Delaware Limited Term Diversified |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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