Correlation Between Federated Equity and Mfs Mid
Can any of the company-specific risk be diversified away by investing in both Federated Equity and Mfs Mid 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 Federated Equity and Mfs Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Equity Income and Mfs Mid Cap, you can compare the effects of market volatilities on Federated Equity and Mfs Mid 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 Federated Equity with a short position of Mfs Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Equity and Mfs Mid.
Diversification Opportunities for Federated Equity and Mfs Mid
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Mfs is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Federated Equity Income and Mfs Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Mid Cap and Federated Equity 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 Federated Equity Income are associated (or correlated) with Mfs Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Mid Cap has no effect on the direction of Federated Equity i.e., Federated Equity and Mfs Mid go up and down completely randomly.
Pair Corralation between Federated Equity and Mfs Mid
Assuming the 90 days horizon Federated Equity Income is expected to generate 0.53 times more return on investment than Mfs Mid. However, Federated Equity Income is 1.88 times less risky than Mfs Mid. It trades about -0.14 of its potential returns per unit of risk. Mfs Mid Cap is currently generating about -0.16 per unit of risk. If you would invest 2,320 in Federated Equity Income on November 28, 2024 and sell it today you would lose (38.00) from holding Federated Equity Income or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Equity Income vs. Mfs Mid Cap
Performance |
| Timeline |
| Federated Equity Income |
| Mfs Mid Cap |
Federated Equity and Mfs Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Equity and Mfs Mid
The main advantage of trading using opposite Federated Equity and Mfs Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Equity position performs unexpectedly, Mfs Mid 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 Mid will offset losses from the drop in Mfs Mid's long position.| Federated Equity vs. Federated Emerging Market | Federated Equity vs. Federated Mdt All | Federated Equity vs. Federated Mdt Balanced | Federated Equity vs. Federated Global Allocation |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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