Correlation Between World Energy and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both World Energy and Mfs Utilities 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 Utilities 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 Utilities Fund, you can compare the effects of market volatilities on World Energy and Mfs Utilities 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 Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Mfs Utilities.
Diversification Opportunities for World Energy and Mfs Utilities
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between World and MFS is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities 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 Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of World Energy i.e., World Energy and Mfs Utilities go up and down completely randomly.
Pair Corralation between World Energy and Mfs Utilities
Assuming the 90 days horizon World Energy Fund is expected to generate 1.27 times more return on investment than Mfs Utilities. However, World Energy is 1.27 times more volatile than Mfs Utilities Fund. It trades about 0.05 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.01 per unit of risk. If you would invest 1,195 in World Energy Fund on September 2, 2024 and sell it today you would earn a total of 351.00 from holding World Energy Fund or generate 29.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. Mfs Utilities Fund
Performance |
| Timeline |
| World Energy |
| Mfs Utilities |
World Energy and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Mfs Utilities
The main advantage of trading using opposite World Energy and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy position performs unexpectedly, Mfs Utilities 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 Utilities will offset losses from the drop in Mfs Utilities' long position.| World Energy vs. Huber Capital Equity | World Energy vs. Us Vector Equity | World Energy vs. Scharf Fund Retail | World Energy vs. Ultra Short Fixed Income |
| Mfs Utilities vs. World Energy Fund | Mfs Utilities vs. Icon Natural Resources | Mfs Utilities vs. Firsthand Alternative Energy | Mfs Utilities vs. Gmo Resources |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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