Correlation Between MFS Investment and TMX Group
Can any of the company-specific risk be diversified away by investing in both MFS Investment and TMX Group 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 MFS Investment and TMX Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFS Investment Grade and TMX Group Limited, you can compare the effects of market volatilities on MFS Investment and TMX Group 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 MFS Investment with a short position of TMX Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFS Investment and TMX Group.
Diversification Opportunities for MFS Investment and TMX Group
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MFS and TMX is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MFS Investment Grade and TMX Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMX Group Limited and MFS Investment 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 MFS Investment Grade are associated (or correlated) with TMX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMX Group Limited has no effect on the direction of MFS Investment i.e., MFS Investment and TMX Group go up and down completely randomly.
Pair Corralation between MFS Investment and TMX Group
Considering the 90-day investment horizon MFS Investment Grade is expected to generate 0.14 times more return on investment than TMX Group. However, MFS Investment Grade is 7.22 times less risky than TMX Group. It trades about 0.08 of its potential returns per unit of risk. TMX Group Limited is currently generating about -0.02 per unit of risk. If you would invest 692.00 in MFS Investment Grade on August 31, 2024 and sell it today you would earn a total of 132.00 from holding MFS Investment Grade or generate 19.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.05% |
| Values | Daily Returns |
MFS Investment Grade vs. TMX Group Limited
Performance |
| Timeline |
| MFS Investment Grade |
| TMX Group Limited |
MFS Investment and TMX Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFS Investment and TMX Group
The main advantage of trading using opposite MFS Investment and TMX Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFS Investment position performs unexpectedly, TMX Group 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 TMX Group will offset losses from the drop in TMX Group's long position.| MFS Investment vs. HUMANA INC | MFS Investment vs. SCOR PK | MFS Investment vs. Aquagold International | MFS Investment vs. Thrivent High Yield |
| TMX Group vs. HUMANA INC | TMX Group vs. SCOR PK | TMX Group vs. Aquagold International | TMX Group vs. Thrivent High Yield |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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