Correlation Between GM and Mfs Blended
Can any of the company-specific risk be diversified away by investing in both GM and Mfs Blended 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 GM and Mfs Blended into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Mfs Blended Research, you can compare the effects of market volatilities on GM and Mfs Blended 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 GM with a short position of Mfs Blended. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Mfs Blended.
Diversification Opportunities for GM and Mfs Blended
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Mfs is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Mfs Blended Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Blended Research and GM 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 General Motors are associated (or correlated) with Mfs Blended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Blended Research has no effect on the direction of GM i.e., GM and Mfs Blended go up and down completely randomly.
Pair Corralation between GM and Mfs Blended
Allowing for the 90-day total investment horizon GM is expected to generate 1.26 times less return on investment than Mfs Blended. In addition to that, GM is 1.97 times more volatile than Mfs Blended Research. It trades about 0.05 of its total potential returns per unit of risk. Mfs Blended Research is currently generating about 0.12 per unit of volatility. If you would invest 1,472 in Mfs Blended Research on September 3, 2024 and sell it today you would earn a total of 1,172 from holding Mfs Blended Research or generate 79.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Mfs Blended Research
Performance |
| Timeline |
| General Motors |
| Mfs Blended Research |
GM and Mfs Blended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Mfs Blended
The main advantage of trading using opposite GM and Mfs Blended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Mfs Blended 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 Blended will offset losses from the drop in Mfs Blended's long position.The idea behind General Motors and Mfs Blended Research 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.| Mfs Blended vs. Fidelity Sai Inflationfocused | Mfs Blended vs. Ab Bond Inflation | Mfs Blended vs. Guidepath Managed Futures | Mfs Blended vs. Inflation Protected Bond Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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