Correlation Between New Perspective and Mfs Value
Can any of the company-specific risk be diversified away by investing in both New Perspective and Mfs Value 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 New Perspective and Mfs Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Perspective Fund and Mfs Value Fund, you can compare the effects of market volatilities on New Perspective and Mfs Value 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 New Perspective with a short position of Mfs Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Perspective and Mfs Value.
Diversification Opportunities for New Perspective and Mfs Value
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Mfs is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding New Perspective Fund and Mfs Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Value Fund and New Perspective 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 New Perspective Fund are associated (or correlated) with Mfs Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Value Fund has no effect on the direction of New Perspective i.e., New Perspective and Mfs Value go up and down completely randomly.
Pair Corralation between New Perspective and Mfs Value
Assuming the 90 days horizon New Perspective is expected to generate 1.05 times less return on investment than Mfs Value. In addition to that, New Perspective is 1.07 times more volatile than Mfs Value Fund. It trades about 0.21 of its total potential returns per unit of risk. Mfs Value Fund is currently generating about 0.24 per unit of volatility. If you would invest 4,860 in Mfs Value Fund on November 4, 2024 and sell it today you would earn a total of 179.00 from holding Mfs Value Fund or generate 3.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Perspective Fund vs. Mfs Value Fund
Performance |
| Timeline |
| New Perspective |
| Mfs Value Fund |
New Perspective and Mfs Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Perspective and Mfs Value
The main advantage of trading using opposite New Perspective and Mfs Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Perspective position performs unexpectedly, Mfs Value 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 Value will offset losses from the drop in Mfs Value's long position.| New Perspective vs. Growth Fund Of | New Perspective vs. American Funds Fundamental | New Perspective vs. Investment Of America | New Perspective vs. Smallcap World Fund |
| Mfs Value vs. Mfs Growth Fund | Mfs Value vs. Prudential Total Return | Mfs Value vs. Mfs International Diversification | Mfs Value vs. Mfs Mid Cap |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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