Correlation Between Ab Global and Mfs Research

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Can any of the company-specific risk be diversified away by investing in both Ab Global and Mfs Research 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 Ab Global and Mfs Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Global Bond and Mfs Research Fund, you can compare the effects of market volatilities on Ab Global and Mfs Research 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 Ab Global with a short position of Mfs Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Global and Mfs Research.

Diversification Opportunities for Ab Global and Mfs Research

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between ANAGX and Mfs is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ab Global Bond and Mfs Research Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Research and Ab Global 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 Ab Global Bond are associated (or correlated) with Mfs Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Research has no effect on the direction of Ab Global i.e., Ab Global and Mfs Research go up and down completely randomly.

Pair Corralation between Ab Global and Mfs Research

Assuming the 90 days horizon Ab Global is expected to generate 3.76 times less return on investment than Mfs Research. But when comparing it to its historical volatility, Ab Global Bond is 3.39 times less risky than Mfs Research. It trades about 0.06 of its potential returns per unit of risk. Mfs Research Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,317  in Mfs Research Fund on September 13, 2024 and sell it today you would earn a total of  1,678  from holding Mfs Research Fund or generate 38.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ab Global Bond  vs.  Mfs Research Fund

 Performance 
       Timeline  
Ab Global Bond 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Ab Global Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Ab Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Mfs Research 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mfs Research Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Mfs Research is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ab Global and Mfs Research Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ab Global and Mfs Research

The main advantage of trading using opposite Ab Global and Mfs Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Global position performs unexpectedly, Mfs Research 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 Research will offset losses from the drop in Mfs Research's long position.
The idea behind Ab Global Bond and Mfs Research 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.
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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