Correlation Between Mfs Emerging and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both Mfs Emerging 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 Mfs Emerging and Mfs Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Emerging Markets and Mfs Lifetime 2065, you can compare the effects of market volatilities on Mfs Emerging 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 Mfs Emerging with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Emerging and Mfs Lifetime.
Diversification Opportunities for Mfs Emerging and Mfs Lifetime
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mfs and Mfs is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Emerging Markets 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 Mfs Emerging 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 Emerging Markets 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 Mfs Emerging i.e., Mfs Emerging and Mfs Lifetime go up and down completely randomly.
Pair Corralation between Mfs Emerging and Mfs Lifetime
Assuming the 90 days horizon Mfs Emerging is expected to generate 2.47 times less return on investment than Mfs Lifetime. But when comparing it to its historical volatility, Mfs Emerging Markets is 1.47 times less risky than Mfs Lifetime. It trades about 0.05 of its potential returns per unit of risk. Mfs Lifetime 2065 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 802.00 in Mfs Lifetime 2065 on September 3, 2024 and sell it today you would earn a total of 258.00 from holding Mfs Lifetime 2065 or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Emerging Markets vs. Mfs Lifetime 2065
Performance |
| Timeline |
| Mfs Emerging Markets |
| Mfs Lifetime 2065 |
Mfs Emerging and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Emerging and Mfs Lifetime
The main advantage of trading using opposite Mfs Emerging and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Emerging 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.| Mfs Emerging vs. HUMANA INC | Mfs Emerging vs. Aquagold International | Mfs Emerging vs. Barloworld Ltd ADR | Mfs Emerging vs. Morningstar Unconstrained Allocation |
| Mfs Lifetime vs. Prudential Core Conservative | Mfs Lifetime vs. Fidelity Advisor Diversified | Mfs Lifetime vs. Western Asset Diversified | Mfs Lifetime vs. Massmutual Select Diversified |
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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