Correlation Between Mfs Prudent and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both Mfs Prudent 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 Prudent 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 Prudent Investor and Mfs Lifetime 2065, you can compare the effects of market volatilities on Mfs Prudent 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 Prudent with a short position of Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Prudent and Mfs Lifetime.
Diversification Opportunities for Mfs Prudent and Mfs Lifetime
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mfs and Mfs is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Prudent Investor 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 Prudent 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 Prudent Investor 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 Prudent i.e., Mfs Prudent and Mfs Lifetime go up and down completely randomly.
Pair Corralation between Mfs Prudent and Mfs Lifetime
Assuming the 90 days horizon Mfs Prudent is expected to generate 5.85 times less return on investment than Mfs Lifetime. But when comparing it to its historical volatility, Mfs Prudent Investor is 1.44 times less risky than Mfs Lifetime. It trades about 0.07 of its potential returns per unit of risk. Mfs Lifetime 2065 is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,026 in Mfs Lifetime 2065 on September 3, 2024 and sell it today you would earn a total of 31.00 from holding Mfs Lifetime 2065 or generate 3.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Prudent Investor vs. Mfs Lifetime 2065
Performance |
| Timeline |
| Mfs Prudent Investor |
| Mfs Lifetime 2065 |
Mfs Prudent and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Prudent and Mfs Lifetime
The main advantage of trading using opposite Mfs Prudent and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Prudent 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 Prudent vs. American Funds American | Mfs Prudent vs. American Funds American | Mfs Prudent vs. American Balanced | Mfs Prudent vs. American Balanced Fund |
| Mfs Lifetime vs. Barings Emerging Markets | Mfs Lifetime vs. Calamos Market Neutral | Mfs Lifetime vs. Jpmorgan Emerging Markets | Mfs Lifetime vs. Transamerica Emerging Markets |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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