Correlation Between Baird Small/mid and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both Baird Small/mid and Mfs Lifetime 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 Baird Small/mid and Mfs Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Smallmid Cap and Mfs Lifetime 2065, you can compare the effects of market volatilities on Baird Small/mid and Mfs Lifetime 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 Baird Small/mid with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Small/mid and Mfs Lifetime.
Diversification Opportunities for Baird Small/mid and Mfs Lifetime
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Baird and Mfs is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallmid Cap and Mfs Lifetime 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2065 and Baird Small/mid 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 Baird Smallmid Cap are associated (or correlated) with Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2065 has no effect on the direction of Baird Small/mid i.e., Baird Small/mid and Mfs Lifetime go up and down completely randomly.
Pair Corralation between Baird Small/mid and Mfs Lifetime
Assuming the 90 days horizon Baird Smallmid Cap is expected to under-perform the Mfs Lifetime. In addition to that, Baird Small/mid is 2.01 times more volatile than Mfs Lifetime 2065. It trades about -0.28 of its total potential returns per unit of risk. Mfs Lifetime 2065 is currently generating about -0.03 per unit of volatility. If you would invest 1,024 in Mfs Lifetime 2065 on November 27, 2024 and sell it today you would lose (4.00) from holding Mfs Lifetime 2065 or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Smallmid Cap vs. Mfs Lifetime 2065
Performance |
| Timeline |
| Baird Smallmid Cap |
| Mfs Lifetime 2065 |
Baird Small/mid and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Small/mid and Mfs Lifetime
The main advantage of trading using opposite Baird Small/mid and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Small/mid position performs unexpectedly, Mfs Lifetime 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 Lifetime will offset losses from the drop in Mfs Lifetime's long position.| Baird Small/mid vs. United Kingdom Small | Baird Small/mid vs. Ashmore Emerging Markets | Baird Small/mid vs. Ab Small Cap | Baird Small/mid vs. Ab Small Cap |
| Mfs Lifetime vs. Artisan Small Cap | Mfs Lifetime vs. Touchstone Small Cap | Mfs Lifetime vs. Needham Small Cap | Mfs Lifetime vs. United Kingdom Small |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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