Correlation Between World Energy and Mfs Corporate
Can any of the company-specific risk be diversified away by investing in both World Energy and Mfs Corporate 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 World Energy and Mfs Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and Mfs Porate Bond, you can compare the effects of market volatilities on World Energy and Mfs Corporate 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 World Energy with a short position of Mfs Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Mfs Corporate.
Diversification Opportunities for World Energy and Mfs Corporate
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between World and Mfs is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Mfs Porate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Porate Bond and World Energy 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 World Energy Fund are associated (or correlated) with Mfs Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Porate Bond has no effect on the direction of World Energy i.e., World Energy and Mfs Corporate go up and down completely randomly.
Pair Corralation between World Energy and Mfs Corporate
Assuming the 90 days horizon World Energy Fund is expected to generate 3.49 times more return on investment than Mfs Corporate. However, World Energy is 3.49 times more volatile than Mfs Porate Bond. It trades about 0.38 of its potential returns per unit of risk. Mfs Porate Bond is currently generating about 0.1 per unit of risk. If you would invest 1,405 in World Energy Fund on September 3, 2024 and sell it today you would earn a total of 141.00 from holding World Energy Fund or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Mfs Porate Bond
Performance |
| Timeline |
| World Energy |
| Mfs Porate Bond |
World Energy and Mfs Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Mfs Corporate
The main advantage of trading using opposite World Energy and Mfs Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Mfs Corporate 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 Corporate will offset losses from the drop in Mfs Corporate's long position.| World Energy vs. Fisher Small Cap | World Energy vs. Rbc Small Cap | World Energy vs. Us Small Cap | World Energy vs. Oklahoma College Savings |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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