Correlation Between Consumer Discretionary and Mfs Utilities
Can any of the company-specific risk be diversified away by investing in both Consumer Discretionary and Mfs Utilities 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 Consumer Discretionary and Mfs Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Discretionary Portfolio and Mfs Utilities Fund, you can compare the effects of market volatilities on Consumer Discretionary and Mfs Utilities 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 Consumer Discretionary with a short position of Mfs Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Discretionary and Mfs Utilities.
Diversification Opportunities for Consumer Discretionary and Mfs Utilities
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Consumer and Mfs is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Discretionary Portfol and Mfs Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Utilities and Consumer Discretionary 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 Consumer Discretionary Portfolio are associated (or correlated) with Mfs Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Utilities has no effect on the direction of Consumer Discretionary i.e., Consumer Discretionary and Mfs Utilities go up and down completely randomly.
Pair Corralation between Consumer Discretionary and Mfs Utilities
Assuming the 90 days horizon Consumer Discretionary Portfolio is expected to generate 1.21 times more return on investment than Mfs Utilities. However, Consumer Discretionary is 1.21 times more volatile than Mfs Utilities Fund. It trades about 0.18 of its potential returns per unit of risk. Mfs Utilities Fund is currently generating about 0.01 per unit of risk. If you would invest 6,546 in Consumer Discretionary Portfolio on August 30, 2024 and sell it today you would earn a total of 558.00 from holding Consumer Discretionary Portfolio or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Discretionary Portfol vs. Mfs Utilities Fund
Performance |
| Timeline |
| Consumer Discretionary |
| Mfs Utilities |
Consumer Discretionary and Mfs Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Discretionary and Mfs Utilities
The main advantage of trading using opposite Consumer Discretionary and Mfs Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Discretionary position performs unexpectedly, Mfs Utilities 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 Utilities will offset losses from the drop in Mfs Utilities' long position.The idea behind Consumer Discretionary Portfolio and Mfs Utilities Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |