Correlation Between American Funds and Mfs Inflation
Can any of the company-specific risk be diversified away by investing in both American Funds and Mfs Inflation 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 American Funds and Mfs Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Inflation and Mfs Inflation Adjusted Bond, you can compare the effects of market volatilities on American Funds and Mfs Inflation 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 American Funds with a short position of Mfs Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Mfs Inflation.
Diversification Opportunities for American Funds and Mfs Inflation
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Mfs is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Inflation and Mfs Inflation Adjusted Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Inflation Adjusted and American Funds 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 American Funds Inflation are associated (or correlated) with Mfs Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Inflation Adjusted has no effect on the direction of American Funds i.e., American Funds and Mfs Inflation go up and down completely randomly.
Pair Corralation between American Funds and Mfs Inflation
Assuming the 90 days horizon American Funds Inflation is expected to generate 0.91 times more return on investment than Mfs Inflation. However, American Funds Inflation is 1.1 times less risky than Mfs Inflation. It trades about 0.1 of its potential returns per unit of risk. Mfs Inflation Adjusted Bond is currently generating about 0.07 per unit of risk. If you would invest 915.00 in American Funds Inflation on September 12, 2024 and sell it today you would earn a total of 27.00 from holding American Funds Inflation or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Inflation vs. Mfs Inflation Adjusted Bond
Performance |
| Timeline |
| American Funds Inflation |
| Mfs Inflation Adjusted |
American Funds and Mfs Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Mfs Inflation
The main advantage of trading using opposite American Funds and Mfs Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Mfs Inflation 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 Inflation will offset losses from the drop in Mfs Inflation's long position.| American Funds vs. Franklin High Income | American Funds vs. Ab Global Risk | American Funds vs. Alliancebernstein Global High | American Funds vs. Fa 529 Aggressive |
| Mfs Inflation vs. Vanguard Inflation Protected Securities | Mfs Inflation vs. Vanguard Inflation Protected Securities | Mfs Inflation vs. American Funds Inflation | Mfs Inflation vs. American Funds Inflation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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